Latin American stocks climb on energy boost, currencies mixed

By Amruta Khandekar

Jan 25 (Reuters) –Gains in oil prices helped prop up most major Latin American stocks on Thursday though currencies were mixed as traders parsed economic data for more clarity on the U.S. interest rate path.

MSCI’s gauge of Latin American stocks .MILA00000PUS advanced 0.5% by 1506 GMT, while an index of currencies .MILA00000CUS was flat.

Equities in Mexico .MXX and Colombia .COLCAP, major oil exporting regions, rose about 0.4% each.

Heavyweight Brazilian shares .BVSP also rose 0.2%, with a boost from energy shares that tracked oil prices higher. O/R

Shares of Brazil’s Petrobras PETR4.SA and Colombia’s Ecopetrol ECO.CN, both state-run oil firms, rose 2.2% and 1.1% respectively.

Among currencies, the Mexican peso MXN= rose 0.1% to trade at 17.1910 to the dollar, while the Colombian peso COP= weakened to 3926.13 per dollar.

The Brazilian real BRL= firmed 0.4%.

Chile’s peso CLP= was flat, while the Peruvian sol PEN=PE was weaker at 3.7605 versus the greenback.

Chile’s Chamber of Deputies on Wednesday approved debating a pension reform pushed by Gabriel Boric’s government, which will allow the leftist president’s key bill to continue its legislative path.

Reduced bets of U.S. interest rate cuts have taken the shine off high-yielding Latin American currencies this year due to concern over narrowing rate differentials as many regions such as Brazil move to ease policy.

Data on Thursday showed the U.S. economy grew faster than expected in the fourth quarter, further clouding the outlook for interest rates.

“In Chile and Peru, inflation is now back within or within touching distance of central banks’ target ranges and we think it will stay there throughout 2024,” said Kimberley Sperrfechter, emerging markets economist at Capital Economics in a note.

“But inflation in Brazil and Mexico is likely to stay above target, meaning that monetary easing cycles will proceed more gradually.”

Chilean stocks .SPIPSA slipped 0.3%, while Argentina’s MerVal index .MERV jumped 2.7%.

Elsewhere, Turkey’s central bank completed its aggressive tightening cycle with a 250 basis point interest rate hike to 45% on Thursday, as expected. The lira TRYTOM=D3 was weaker at 30.2725 versus the greenback.

“We think an extended hold by the CBRT (Turkish central bank) is now highly likely,” said Nick Rees, FX market analyst at Monex Europe, citing upside risks to inflation.

South Africa’s central bank left its main lending rate unchanged at 8.25% on Thursday, as its governor Lesetja Kganyago said there was no clear disinflation trend yet.

Key Latin American stock indexes and currencies at 1506 GMT:

Reporting by Amruta Khandekar;Editing by Elaine Hardcastle