Latin American and, in particular, Brazilian stocks struggled to get out of the red for the third consecutive day – but to no avail – as ongoing comments from U.S. Federal Reserve policymakers continued to weigh on investors concerned about the prospects for inflation and further interest rate hikes.
Brazil’s Bovespa index tumbled 1293.80, or 3.54%. Mexico’s benchmark Bolsa declined 384.84 points, or 2.05%, while Argentina’s Merval Index dropped 26.13 points, or 1.59%.
Brazilian stocks extended recent losses, as investors remained cautious about a global economic slowdown and possible interest rate increases in the U.S. Falling stock markets in other large emerging markets, such as Mexico, India and Russia, also weighed on the Bovespa.
Elsewhere, Mexican stocks headed south as well, with investors remaining cautious about U.S. inflation pressures. The anxiety has taken a toll on emerging markets, as investors sell off holdings and seek greener pastures before the U.S. Federal Open Market Committee’s June 29 meeting to determine the course of interest rates.
The emerging markets correction of the past month has pulled the IPC down from a record-high close of 21,823 points on May 9, but the index is up about 800 points from its 2005 close. Shares may have also been pressured recently by pre-election jitters, as Mexicans are scheduled to vote for a successor to President Vicente Fox on July 2.
Among individual Mexican companies, shares of wireless phone company America Movil and fixed-line phone company Telmex both retreated.
Still in Mexico, airport operator Asur’s shares slid after the company said the effects of Hurricane Wilma last year continued to weigh on passenger volumes in May at the Cancun airport, particularly among international travelers. Overall airport volumes fell 4.7% year-on-year.
Meanwhile, Argentina has made a counteroffer aimed at breaking an impasse in the drawn-out bilateral talks aimed at renewing the country’s contract for natural gas imports from Bolivia, according to news reports citing a Bolivian official.
Local newspapers in Argentina Wednesday cited Bolivian Planning Minister Carlos Villega as saying that his counterparts in the Argentine Planning Ministry had suggested a price of $5.00 per million British Thermal Units against Bolivia’s standing offer of $5.50 per million BTU.
Thomson Financial – www.thomsonfinancial.com