Geopolitical misfortunes shake Russian and European markets; Latam FX on the rise

  • The ruble marks its worst day in 15 months
  • Eastern European stocks fall
  • The Brazilian real at its highest for almost 2 months

Jan 13 (Reuters) – The Russian ruble fell on Thursday and European markets slumped as tensions mounted between Moscow and Washington, while Latin American currencies rose against a weaker dollar.

The ruble fell 2.5%, marking its worst day in 15 months after the Kremlin said talks with the US and NATO this week had been ‘unsuccessful’ to bridge fundamental differences over the crisis Ukraine and Moscow’s demands for NATO to withdraw from the center and the east. Europe. Read more

The United States said it had broadly picked out the options for sanctions against Russia if it invaded Ukraine and would be ready to impose them as soon as tanks rolled in.

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Russian stocks (.IMOEX) fell 4%, while the MSCI index of Eastern European stocks (.MIME00000PUS) fell 4.4%. Poland’s foreign minister has warned that Europe risks descending into war over the Ukraine issue. Read more

RUB underperforms emerging markets as geopolar tensions rise

In Latin America, the Brazilian real rose 0.4% to near two-month highs as data showed that services activity in Brazil returned to positive territory in November with a much stronger-than-expected gain .

But with weaker-than-expected industrial production and civil construction inputs, Citigroup strategists now expect gross domestic product to contract in the fourth quarter. Tighter monetary policy and rising Omicron cases are also expected to cause 2022 annual GDP to contract.

While the dollar took a hit as speculation about US monetary policy tightening died down, most other Latin American currencies traded steadily higher, with the Colombian peso hitting highs on a month.

Among stocks, Brazilian meatpackers BRF (BRFS3.SA), Marfrig (MRFG3.SA) and JBS (JBSS3.SA) jumped between 1.8% and 5%. The BRF has signed a memorandum of understanding with Saudi Arabia’s sovereign wealth fund to establish a joint venture to manufacture poultry products in the Middle Eastern country. Read more

Miner Vale (VALE3.SA) slid 1% as iron ore prices fell on demand uncertainty. JPMorgan sees cost inflation dominate miners’ earnings in the second half of 2022 and expects Rio Tinto (RIO.L), BHP (BHP.AX) and Vale to maintain cautious guidance and supply to remain tight in 2022.

In Argentina, inflation probably rose to 3.6% in December, according to a Reuters poll, which would be the highest level since last April. The country’s central bank recently raised the benchmark interest rate to 40%, its first increase in more than a year.

Elsewhere, China Evergrande Group’s (3333.HK) lead unit Hengda Real Estate Group reached an agreement with bondholders to delay payments on a 4.5 billion yuan onshore bond (707, $5 million), Hengda said in a filing Thursday. Read more

Major stock indices and currencies in Latin America:

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Reporting by Susan Mathew in Bengaluru; Editing by Mark Potter and Richard Chang

Our standards: The Thomson Reuters Trust Principles.

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