* Petrobras CEO: Conflict to lead to higher oil volatility * Mexico’s CPI eases but still above central bank’s target * Latin American stocks down 0.2%, currencies up 0.3% By Johann M Cherian Oct 9 (Reuters) – Most Latin American stocks took a hit on Monday as caution enveloped markets following the attack on Israel by the Palestinian Islamist group Hamas, but regional currencies managed to stay afloat as commodity prices gained. MSCI’s emerging market index for Latim America was down 0.2% by 1455 GMT, with Brazil’s Bovespa index and Mexico’s benchmark index sliding 0.3% and 1.2%, respectively. “It’s not contained to any individual country and this is a global issue and it involves a lot of countries in global trade and global appetite for riskier assets,” said Carlos Von Hardenberg, co-founder of Mobius Capital Partners. Separately, the CEO of Brazil’s Petrobras said the conflict between Israel and Hamas is likely to lead to higher volatility and speculation in oil markets. Shares of the oil giant surged 3.5% on the back of the spike in oil prices. Latin American currencies gained 0.3% against the dollar. The Colombian peso got a boost, adding 0.2% as contracts tracking crude prices increased more than 3% on worries of escalating tensions hitting oil supply from the Middle East. Colombia is an oil producer. The Peruvian sol also added 0.2% as copper prices rose. Peru is a major producer of the metal. Latin American currencies ended the previous week with losses amid expectations that U.S. credit conditions would stay tighter for longer, even as regional central banks like Brazil continued with monetary policy easing. Gabriel Galipolo, monetary policy director at Brazil’s central bank, said the Israeli-Palestinian conflict would impact global prices and contribute to a challenging external environment, but he reinforced policymakers’ commitment to keep lowering borrowing costs. The Brazilian real was down 0.2%. Meanwhile, Mexico’s annual inflation eased in September to 4.45%, but still remained above the central bank’s target of 3%, supporting forecasts that it would keep its key interest rate at unchanged at the current level. The Mexican peso was down 0.9%. “I do not expect a lot of room to lower rates drastically in 2023 … this is more a story in 2024 when also the U.S. will move gradually towards monetary easing,” Hardenberg added. Markets in Chile, the world’s top copper producer, were shut on account of a public holiday. Key Latin American stock indexes and currencies at 1455 GMT: Latin American market prices from Reuters Stock indexes Latest Daily YTD % % change change MSCI Emerging Markets 934.92 -0.26 -1.96 MSCI LatAm 2160.91 -0.17 3.27 Brazil Bovespa 113739.53 -0.38 3.65 Mexico IPC 49067.13 -1.21 1.24 Chile IPSA 0.00 0 0 Argentina MerVal 648632.13 3.135 220.97 Colombia COLCAP 1110.32 0.76 1118.6 Currencies Latest Daily YTD % % change change Brazil real 5.1700 -0.17 -35.91 Mexico peso 18.3305 -0.91 7.47 Chile peso 919.6 0.00 -33.16 Colombia peso 4334.73 0.2 -31.03 Peru sol 3.8201 -0.17 -15.26 Argentina peso 349.9500 0.04 -94.68 (interbank) Argentina peso 880 0.00 -97.81 (parallel) (Reporting by Johann M Cherian in Bengaluru; Editing by Paul Simao)
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