EMERGING MARKETS-Latam Assets retreat, Brazil's real drops after rate cut

    * Brazil central bank hints at further easing
    * Brazil April economic activity plummets
    * Argentina's peso at new low as debt talks stall

    By Ambar Warrick
    June 18 (Reuters) - Brazil's real sank on Thursday after a
widely expected interest rate cut, while concerns over a
resurgence in COVID-19 cases kept broader Latin American markets
off balance.
    The real fell more than 1% after the Monetary Policy
Committee cut rates further into record-low territory overnight
while indicating that there was still some room for further
"residual" trimming to tide the economy through the coronavirus.

    The bank's signaling of future cuts spelled more real
weakness, given that record-low rates have already made it a
less-lucrative investment destination. 
    "The Monetary Policy Committee (Copom) judges that with the
cut to 2.25% the monetary stimulus 'appears compatible with the
economic impact of the COVID-19 pandemic,'" Goldman Sachs
analysts wrote in a note.
    "But the Copom is far from sure that is the case, and the
rest of the guidance seems to have shifted the policy needle
baseline towards additional easing."
    Data also showed Brazilian economy activity slumping at a
record pace in April due to the pandemic.
    Brazilian stocks rose about 0.3%, while MSCI's index
of Latin American equities fell nearly 1%.
    Chilean stocks were flat, while the peso
sank 1.8%.
    Sentiment was dented by spiking COVID-19 cases in the United
States, while data showed that U.S. jobless claims remained
    Safe-haven plays such as the U.S. dollar and the
Japanese yen benefited from the risk-off sentiment.

    Mexico's peso and Colombia's peso retreated as
oil prices remained under pressure from fears of weakening
    "The path forward remains particularly uncertain for energy
demand, as a second wave of the virus could keep energy
consumption in check. At the same time, evidence is emerging
that expectations for market-driven and OPEC+ curtailments are
declining," strategists at TD Securities wrote in a note.
    Argentina's peso weakened to a record low as the
country's debt restructuring talks hit a roadblock, with the
government determined not to cede further ground after making an
improved offer and a key creditor group warning that
negotiations had failed.
    Key Latin American stock indexes and currencies:
    Stock indexes             Latest    Daily % change
 MSCI Emerging Markets          995.92            0.13
 MSCI LatAm                    1935.65           -0.97
 Brazil Bovespa               95815.68            0.28
 Mexico IPC                   37627.13           -0.71
 Chile IPSA                    3994.76           -0.05
 Argentina MerVal                    -               -
 Colombia COLCAP               1143.71            0.39
       Currencies             Latest    Daily % change
 Brazil real                    5.3280           -1.29
 Mexico peso                   22.4833           -0.81
 Chile peso                      810.8           -1.75
 Colombia peso                 3767.05           -0.73
 Peru sol                       3.5148           -0.51
 Argentina peso                69.7300           -0.07

 (Reporting by Ambar Warrick in Bengaluru; Editing by Dan

Source: Read Full Article