Major Latin American Stocks Fell Amid China Concerns

February 9, 2018

Latin America Business

Major Latin American Stocks Fell Amid China Concerns

Latin American stock markets mostly were hurt Friday by fears about the possibility that China’s fight against local inflation stall economic recovery.


Brazil’s commodities-rich Bovespa dropped 1.2% to 70,367.15, finishing the week 3.1% lower. Oil price fell on fears about slower demand from China which is Brazil’s largest trading partner. The decline in oil prices hurt shares of Brazilian oil firm Petrobras. The stocks lost 3.3.%.


According to Brazil’s census bureau, September’s retail sales rose 0.4% on a seasonally adjusted basis. However, the increase was still slower than 1.9% of the August. Retail activity gave up four months of expansion.


Mexico’s IPC index fell 0.7% to 36,057.39, mining stocks were the worst performers. Silver miner Industrias Penoles slumped 4.1% and Copper miner Grupo Mexico tumbled 3.8%.


Chile’s IPSA equity index dropped 0.7% to 4,977.95, closing the week up 0.4%. In Argentina, the Merval ended down 3.8% to 3,215.48, finishing the week 4.1% lower.


In mainland China, investors worried about the central bank’s aggressive increase in interest rates in the wake of whopping inflation data. The consumer price index climbed 4.4% last month, 0.4% higher than expected.


Mauricio Rosal, an economist at Raymond James Latin America, suggested Brazil’s central bank being bothered by rise in local food-price pressures this year. It is likely that the bank will acknowledge that inflationary risks have titled to the upside. Mauricio Rosal reminded of the possibility of combating the more permanent and pervasive impact on overall prices.


U.S. stocks also ended a lackluster week as worries on China’s further tightening monetary policy. The Dow Jones Industrial Average lost 0.8% to 11,102.58, giving up 2.2% this week on concerns on Europe’s debts and impacts of $ 600 billion bond-buying initiative approved by the Fed.


The Nasdaq Composite Index slid 1.5% to 2,518.21, shedding 2.4% this week while the S&P 500 Index broke a five-week streak of gains, closing down 1.2% to 1,199.21 on Friday. Materials were the worst performers of the S&P 500.


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