Latin American stocks climb on energy boost, currencies mixed as focus turns on Fed

Updated at 3pm ET /2000 GMT

By Amruta Khandekar

Jan 25 (Reuters) – Higheroil prices lifted mostmajor Latin American stock indexeson Thursday, whilecurrencies were mixed as traders parsed economic data to assessthe U.S. interest rate outlook compared with emerging markets.

Oil prices rallied for a second straight day to their highest since early December on news of faster-than-expected growth in the last quarter and as ongoing tensions in the Red Sea region added to supply worries. O/R

Equities in Mexico .MXX and Colombia .COLCAP, major oil exporting regions, rose 1.5% and 0.5% respectively.

Brazilian shares .BVSP gained 0.4%, primarily boosted by the energy sector.

Shares of state-owned oil firms Brazil’s Petrobras PETR4.SA and Colombia’s Ecopetrol ECO.CN rose 3% and 2.4% respectively.

Mexico’s peso was flat, MXN=, Chile’s peso CLP= edged up 0.1% and Peru’s sol PEN=PE slipped 0.1%.

However, Colombia’s peso COP= tumbled 0.6% to 3,936.75 per dollar.

“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.”

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

The Brazilian real BRL= firmed 0.2%.

MSCI’sgauge of Latin American stocks .MILA00000PUS rose for a third straight session, to 0.4%.

An index of currencies .MILA00000CUS was flat.

Chile’s Chamber of Deputies on Wednesday approved debating pension reform pushed by leftist President Gabriel Boric’s government, allowing his bill to proceed onits legislative path.

Chilean stocks .SPIPSA slipped 1.2%.

Argentina’s MerVal index .MERV jumped 2.8% after President Javier Milei’s economicreform package cleared its first hurdle in Congress with a green light from a lower house committee.

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%, with Governor Lesetja Kganyago saying therewas no clear disinflation trend yet.

Key Latin American stock indexes and currencies at 2000 GMT:

Reporting by Amruta Khandekar and Lisa Mattackal; Editing by Elaine Hardcastle and Richard Chang