By Carla Mozee
Latin American natural resource and financial stocks were among
those hit Tuesday, with the broad selloff in equities reflecting
investor worries that the U.S. Federal Reserve may not
significantly ramp up efforts to prevent further slowing in the
economy.
Investors "are not sure the Federal Reserve is going to
implement new stimulus. There's discontent with the possibility
that the Fed is going to do nothing at the end of the meeting,"
said Alfredo Coutino, director of Latin American research at
Moody's Economy.com, in a telephone interview.
"It seems that markets are 50/50; they keep some hopes, but they
are doubting that the Fed is going to do something, at least
today."
In Mexico City, the IPC index fell 0.8% to 32,567 as just a
handful of its 35-listed issues traded higher. Fixed-line operator
Telefonos de Mexico (TMX) rose 1.4% and conglomerate Alfa rose
0.8%, winning back a portion of its 1.6% loss on Monday.
Banking firm Grupo Financiero Banorte shares slumped 1.8% and
Grupo Financiero Inbursa lost 0.8% while Banco Compartamos edged up
0.4% ahead of the Federal Reserve's decision.
Mexico, with its high exposure 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."
Nervousness about the Fed decision due at 2:15 p.m. Eastern is
reflected in the Mexican peso, he said.
The U.S. dollar rose 0.4% against the Mexican currency, which
traded at 12.654 pesos. The dollar gained 0.7% against Brazil's
real, which traded at 1.761.
In Sao Paulo, the Bovespa dropped 1.3%, with heavily weighted
mining stocks posting the worst loss as a group, down 2.2%. MMX
Mineracao shares fell 3% while Vale (RIO), the world's largest
iron-ore provider, slid 1.8% and steel producer Gerdau (GGB) fell
2.4%. 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 report that imports in China
slowed in July from the previous month, while exports surged.
Brazil is China's largest trading partner.
In Buenos Aires, only shares of power provider Edenor (EDN) were
higher in the Merval index, by 0.8%. Losses in the other 14
components, including a 2% fall in locally traded shares Brazil's
Petrobras, pushed the Merval down 1.2% to 2,398.
In Santiago, the IPSA fell 0.4% to 4,477, putting it on track to
post its first loss in five sessions. The index finished the
previous session at a record closing high.
Among exchange-traded funds, the iShares MSCI Mexico Index Fund
(EWW) fell 1.2%. The iShares MSCI Brazil Index Fund (EWZ) lost 1.6%
and the iShares MSCI Chile Investable Fund (ECH) fell 0.5%.
Also down, the iShares S&P Latin America 40 Fund (ILF) fell
1.4%.
