By Carla Mozee
Latin American equity markets pared losses at Tuesday's close
after the U.S. Federal Reserve said it will rollover debt in a move
to help the world's largest economy from further slowing.
The Fed said after its latest monetary policy meeting that it
will reinvest proceeds from maturing mortgage debt back into the
Treasury market so that its balance sheet doesn't shrink. The move
comes as policy makers expect economic recovery to be more
muted.
"The Fed has delivered some happiness to the markets," said
Alfredo Coutino, director of Latin American research at Moody's
Economy.com, in a telephone interview after the Fed decision. "The
Fed is extending the quantitative monetary stimulus for the
economy, and that's what the market was expecting, at the
minimum"
But worries that the Fed may have opted to do nothing at the
meeting put pressure on the markets, he said.
In Mexico City, the IPC index fell 0.5% to 32,685.52, recovering
from a loss of 1% ahead of the Fed's announcement.
Still, only ten of the index's 35-listed issues closed higher.
Fixed-line operator Telefonos de Mexico (TMX) rose 1.8% and
conglomerate Alfa advanced 1.2%, nearly erasing its 1.6% loss on
Monday.
Losses in shares of banking firm Grupo Financiero Banorte shares
deepened to 2.4%, but Grupo Financiero Inbursa reversed course to
end 0.7% higher. Banco Compartamos pared earlier gains, ending up
0.1%.
Mexico, which is highly exposed to the U.S. economy, "is worried
about the signs of decelerations that the U.S. economy is sending,
particularly in the past few weeks," said Coutino.
"That implies that...the strong recovery that the Mexican
economy registered in the first half of this year is going to go
down during the second half. It's important to see that policy
makers in the U.S. are ready to take actions in terms of supporting
the U.S. recovery."
The Mexican peso bounced back from losses against the U.S.
dollar after the Fed's decision. The currency traded at 12.586
pesos compared with Monday's level at 12.624. The dollar remained
higher against Brazil's currency. The real traded at 1.757, down
from 1.754 reals on Monday.
In Sao Paulo, the Bovespa equity index fell 0.9% at 67,223.23,
coming back from a low of 66,946 during the session.
Most mining stocks closed off their session lows, but the
heavily weighted group still posted the worst performance on
Tuesday. MMX Mineracao shares fell 4.7% while Vale (RIO), the
world's largest iron-ore provider, lost 1.3%. Steel producer Gerdau
(GGB) shares fell 2.1% while shares of CSN (SID) clawed out of the
red to finish up 0.2%.
Also, oil giant Petrobras (PBR) gave up 1.5%.
While dollar-denominated commodity prices came under pressure as
the U.S. dollar hit its highest level in month, investors in
Brazilian assets also assessed a July slowdown in imports in China
from the previous month, while exports surged. China is Brazil's
largest trading partner.
Meanwhile, in Buenos Aires, the Merval index fell 1% to
2,402.44. Three of the 15 stocks on the index advanced: Banco Macro
(BMA) rose up 0.6%, auto parts supplier Mirgor edged up 0.1% and
Petrobras Energia (PZE) gained 0.2%.
In Santiago, the IPSA fell 0.3% to 4,482.82, its first loss in
five sessions. The index finished the previous session at a record
closing high of 4,495.91.
Among exchange-traded funds, the iShares MSCI Mexico Index Fund
(EWW) fell 0.3% and the iShares MSCI Brazil Index Fund (EWZ) fell
0.9%.
The iShares MSCI Chile Investable Fund (ECH) eked out gain of
less than 0.1%, and the iShares S&P Latin America 40 Fund (ILF)
gave up 0.8%.