Latin American markets end rocky week eyeing Fed
Reuters, Friday, September 25, 1998 at 19:49
By Richard Jacobsen
MEXICO CITY, Sept 25 (Reuters) - Latin American markets
ended another rocky week on Friday with buyers showing some
timid interest in battered stocks, betting the U.S. Federal
Reserve will cut interest rates next week.
Shares tumbled in early dealings, rattled by news U.S.
hedge fund Long-Term Capital Management had to be bailed out by
the Federal Reserve Bank of New York and other banks.
But concerns over the threat of widespread failures gave
way to hope the Fed will announce a rate cut at its policy-
making meeting on Tuesday.
Latin American policy makers have been clamoring for a U.S.
rate cut that would take pressure off the region's embattled
currencies and equity markets.
"If the Fed cuts the rate a quarter of a point, nobody will
(care). The market has already taken that as something that
will happen," said Jose Pablo Aguirre, a trader at brokerage
Sudamericano in Chile. "If it is a half-point drop, it will be
noticed."
BRAZIL'S Bovespa (INDEX:$BVSP.X) index of 57 leading shares closed
down 1.94 percent at 6712 points, but finished well above its
session low of 6411. Volume was 346 million reais.
"The market was working in negative territory all day in
function of the problems with the American hedge fund," said
Fabio Colombo, a fund manager at Banco Credibanco. "It was a
weak day with very little volume."
Brazilian traders said the local market would continue to
be rocky through the country's Oct. 4 general election. After
the vote government should be free to take strong action on the
country's brewing economic crisis, they said.
Brazilian share prices made a ragged recovery after
bottoming out earlier this month, but the Bovespa index is
still down nearly 40 percent since the recent global market
crisis started in August.
Analysts in other parts of the region said after the Fed
meeting, the Brazilian elections will be a factor keeping
investors skittish next week.
"I think (Mexican stocks) may move lower," said Carlos
Samano, director of analysis at Mexico's Bancomer. "Brazil is
going to generate a lot of volatility and I think that's going
to weigh more than anything else."
MEXICO'S bolsa, however, recovered from a three-percent
morning decline to post a modest rise on Friday.
Traders in Mexico said the Dow industrial's recovery --
tied to expectations of a Fed rate cut -- was the catalyst for
the rebound.
The IPC index <.MXX> finished the day up 13.21 points, or
0.36 percent, at 3703.69.
"When the Dow started to turn around, we just started
following it," one Mexican trader said.
The Dow industrials ended the day up 26.78 points, or 0.33
percent, at 8028.77. It hit a low of 7890 during the day.
The IPC ended the week up 277.79 points, or 6.55 pct, but
was still down 44 percent year-to-date in dollar terms.
ARGENTINE shares rose after traders shifted their focus
from the gloom of financial turmoil to hopes of a U.S. rate
cut.
"The market was really good today. It really distinguished
itself from Brazil," trader Mario Zawadzki at Schweber
brokerage said.
The MerVal <.MERV> index of most traded shares closed up
1.47 percent at 389.25 points.
The bourse ended 8.3 percent higher week over week, but is
still off 43.4 percent in the year.
Chilean leading stocks also rose on Fed rate-cut hopes. The
IPSA <.IPSA> index of the leading 40 stocks rose 0.93 percent
to 64.45 points, but the broader IGPA <.IGPA> gauge slid 0.28
percent to 3248.89 points.
Venezuelan share prices also mirrored regional gains to end
ahead in slow trade, but dealers said profit-taking would soon
dent the week's 14 percent gain.
The 15-share <.IBC> index rose 1.1 percent to finish at
3,447.11 points, largely buoyed by gains in national telephone
company CANTV (VEN:TDV.D) (NYSE:VNT).
Copyright 1998, Reuters News Service |
