Latin American stocks and currencies surged on Tuesday with a dovish boost from the European Central Bank and positive headlines from the U.S.-China trade tensions boosting sentiment.
MSCI's index of Latin American stocks jumped 2%, while its index of regional currencies rose for the first time in four sessions, up 0.7% as regional currencies firmed against a steady dollar.
Ahead of a U.S. Federal Reserve policy meeting outcome on Wednesday, when the bank is expected to lay the groundwork for a rate cut, ECB President Mario Draghi hinted at the possibility of new rate cuts. This, along with news that China and the United States are rekindling trade talks after a lull ahead of a meeting between Presidents Donald Trump and Xi Jinping at the G20 summit later this month, buoyed markets globally.
Regional assets joined the rally with Brazil stocks rising 1.6% to hit a three-month high. Petrochemical company Braskem cut early losses to trade 4.7% higher. A Brazilian judge on Tuesday granted bankruptcy protection to the company's controlling shareholder Odebrecht, and included Braskem in a list of subsidiaries that creditors are not allowed to sell shares in.
The Real currency firmed 0.7% ahead of the Brazilian central bank's rate meeting on Wednesday, when it is expected to keep its key lending rate on hold.
Returning from a three-day weekend, Argentine stocks rose about 2% and scaled an all-time high before trading 0.8% higher, while the currency rose more than 1%. Oil and financial stocks climbed, overall 45 shares were up and 41 down with 8 unchanged. During the last week Merval stocks were up 16% in US dollars.
Likewise the JP Morgan country risk of Argentina dropped 17 points on Tuesday, and was down to 833 points, the lowest in two months, following on the latest political events, particularly the Macri/Pichetto presidential ticket.
A rise in crude oil prices helped Colombian assets. The oil- exporting country's currency rose almost 1%, while stocks rose 1.7% to an over four-week high, with state oil firm Ecopetrol up 2.3%.
Copper-exporting Chile's peso rose after four straight sessions of losses. Copper prices hit three-week highs on Tuesday on trade optimism. Santiago-traded stocks rose 0.1%. Chile President Sebastián Piñera said on Tuesday the government will accelerate a US$ 4 billion infrastructure program this year to revive the country's slow-growing economy. The labor minister, Nicolás Monckeberg, also said the government will push pension reform plans through Congress with extreme urgency.