EMERGING MARKETS-Latam FX weakens as dollar unfazed by jobs data; stocks edge up

    * Fitch downgrades Colombia's credit rating
    * BofA expects Mexican economy to shrink 8% in 2020
    * Dollar unfazed by unemployment data
    * Oil price spike helps Brazil's Petrobras

 (Adds analyst comment, updates prices)
    By Ambar Warrick and Susan Mathew
    April 2 (Reuters) - Latin American stocks made small gains
on Thursday in a volatile session, while most regional
currencies weakened as a swathe of weak economic readings
increased safe-haven demand for the dollar.
    After dismal manufacturing data from around the globe had
dented sentiment on Wednesday, a spike in weekly U.S.
unemployment claims further outlined the economic impact of the
coronavirus outbreak.
    With global infections now crossing the 1 million mark, a
return to business as usual in the near term seems unlikely,
with economic activity likely to contract further.
     Latam stocks rose about 1%, tracking some
gains on Wall Street, while currencies fell
0.4%, with oil-sensitive players such as Mexico's peso
and Colombia's peso failing to capitalize on a jump in
oil prices.
     In fact, the weak reading furthered the rush for the
dollar, which has been a sole beacon of stability amid a
valuation rout that has battered everything between equities and
treasury yields. 
    Even though jobless claims topped estimates by a wide
margin, some analysts say the market may have priced them in,
while others say it is beyond comprehension.
    Analysts were also of the opinion that the U.S. numbers only
heralded a further downturn in economic activity.
    "The data tsunami is coming, and this is only the beginning.
We look for the USD to gain traction in the weeks ahead," TD
Securities wrote in a note.
    Mexico's peso fell 0.5% after the finance ministry predicted
a 3.9% contraction for the economy this year, while Bank of
America forecast an 8% shrinkage due to fallout from the virus
    Mexican stocks fell slightly.
    Brazil's real retreated slightly, while stocks
 jumped 1.9% on gains in state-owned oil and gas behemoth
Petrobras. The stock surged in tandem with oil
prices, which spiked on hopes of an end to the Saudi-Russian
price war. 
    Brazil continued attempts to shield its economy from impacts
of the crisis with the Monetary Council authorizing the central
bank to lend directly to banks using credit portfolios as
collateral, while the government unveiled a $10 billion scheme
to protect jobs.
    Colombian shares rose 3% after four sessions of
losses, while the peso retreated.   
    Fitch on Wednesday downgraded Colombia's credit rating,
leaving it just a notch above junk, citing the likely economic
weakening spurred by the pandemic. 
    "Colombia still has one of the best outlooks for LATAM, but
the risk at getting downgraded to junk is growing and that could
scare away a lot of foreign investors," said Edward Moya, senior
market analyst at OANDA, New York.
    Key Latin American stock indexes and currencies at 2056 GMT:
    Stock indexes             Latest     Daily % change
 MSCI Emerging Markets          837.72               1.26
 MSCI LatAm                    1529.10               1.42
 Brazil Bovespa               72310.67               1.89
 Mexico IPC                   33464.71              -0.67
 Chile IPSA                    3559.25               4.03
 Argentina MerVal             25803.27              1.891
 Colombia COLCAP               1095.40               3.05
       Currencies             Latest     Daily % change
 Brazil real                    5.2623              -0.05
 Mexico peso                   24.3800              -0.73
 Chile peso                      858.8               0.28
 Colombia peso                    4024               1.52
 Peru sol                       3.4398               0.73
 Argentina peso                64.7175              -0.29
 (Reporting by Ambar Warrick and Susan Mathew in Bengaluru
Editing by Alistair Bell and Matthew Lewis)

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