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U.S. consumer spending rebounds in January
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Brazil's consumer prices rise more than expected
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Mexico's economic growth tops forecasts in Q4
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Latam FX down 1.0%, stocks off 2.5%
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EM stocks fall 1.9%, FATF adds South Africa to 'grey list'
(Adds market details, updates prices)
By Amruta Khandekar and Bansari Mayur Kamdar
Feb 24 (Reuters) - Emerging market stocks extended
declines sharply on Friday after further evidence of persistent
U.S. inflation spurred fears of more interest rate hikes by the
Federal Reserve, with the index on track for its worst weekly
performance in over four months.
The MSCI's index for emerging market stocks fell
1.9% by 1828 GMT and was set to log its fourth straight week in
the red, having lost momentum after a strong start to the year
on fears of higher rate hikes and geopolitical worries in the
days leading up to the Ukraine war's first anniversary.
"Inflation in the U.S. may not entirely mean price pressures
elsewhere like last year, but Latam will emerge with less losses
as their post-pandemic realities fare better than the
Asia-European landmass affected by war and natural disasters,"
said Juan Perez, director of trading at Monex USA.
Latin American equities fell 2.5%, and were
headed for weekly declines of nearly 3%.
Data on Friday showed U.S. consumer spending rebounded
sharply in January amid strong income growth, while inflation
accelerated, supporting the case for the Fed to keep tightening
monetary policy for longer.
"At the very minimum right now, the probabilities are quite
high we're going to have three more quarter-point rate hikes at
the next three (Fed) meetings," said Randy Frederick, managing
director of trading and derivatives at Charles Schwab.
Brazil's Bovespa index dropped 2.0%.
Regional currencies fell 1.0% as the dollar firmed, with the currency of the world's biggest copper
producer, Chile , down 2.3% and leading declines among
peers as prices of the red metal fell sharply. .
Chile's peso was set for its biggest weekly fall since
November last year.
The Brazilian real fell 1.2% after data showed the
country's consumer prices rose by more than expected in the
month to mid-February, with annual inflation remaining well
above target.
However, in a bright spot, foreign direct investment in
Brazil reached its highest level for January in five years,
according to central bank data on Friday.
Mexico's peso slipped 0.2% against the dollar despite
data showing the country's economy grew 0.5% in the fourth
quarter from the previous three-month period, slightly above
forecasts.
Elsewhere in emerging markets, global financial crime
watchdog FATF added South Africa to its "grey list" of countries
under special scrutiny to implement standards to prevent money
laundering and terrorism financing.
"Such a headline could create further headwinds to already
fragile ZAR (rand) sentiment which is grappling with severe
levels of electricity supply cuts and is hurting industrial
production and export volumes," said Jeffrey Schultz, Middle
East and Africa chief economist at BNP Paribas.
Key Latin American stock indexes and currencies at 1828 GMT:
Stock indexes Latest Daily % change
MSCI Emerging Markets 969.27 -1.87
MSCI LatAm 2190.16 -2.43
Brazil Bovespa 105497.70 -1.95
Mexico IPC 52523.51 -1.06
Chile IPSA 5330.32 0.33
Argentina MerVal 247422.28 -0.236
Colombia COLCAP 1186.07 -0.52
Currencies Latest Daily % change
Brazil real 5.1984 -1.25
Mexico peso 18.4139 -0.29
Chile peso 826.8 -2.23
Colombia peso 4837.15 0.38
Peru sol 3.8197 -0.79
Argentina peso (interbank) 195.6900 -0.18 Argentina peso (parallel) 375 1.07 (Reporting by Amruta Khandekar and Bansari Mayur Kamdar in
Bengaluru
Editing by Shounak Dasgupta and Matthew Lewis)
