Colombian stocks, FX lag regional peers as US tensions weigh — TradingView News

By Niket Nishant and Johann M Cherian

The Colombian peso weakened against the U.S. dollar on Monday as tensions with Washington over tariffs and drugs cast a shadow on the currency, while an index tracking the country’s equities slipped and lagged regional peers.

The moves put the spotlight on how quickly political frictions can unsettle sentiment even as Latin American economies seek to capitalize on investors’ growing appetite for diversification and currency upside.

“The U.S. administration is taking a very, very aggressive stance. It could have very significant implications, especially for the global commodity markets,” said Carlos von Hardenberg, founder of investment firm MCP Emerging Markets.

Commodities form the backbone of exports for much of Latin America, leaving the region highly exposed if political tensions disrupt supply chains.

Bogota recalled its ambassador from the United States after U.S. President Donald Trump vowed to raise tariffs on Colombian imports and called Colombian President Gustavo Petro an “illegal drug leader”, which Petro’s government described as offensive.

The sharp escalation led to the Colombian peso USDCOP falling 0.9% against the dollar, while equities ICAP dipped 0.88%.

The losses left Colombia trailing regional peers, as Brazil’s benchmark equity index IIBOV hit a two-week high and Argentina’s stocks IMV were on track for their longest winning streak in nearly three months.

They were last up 0.67% and 1.77%, respectively. The real USDBRL rose 0.6%.

Argentina’s central bank also said it signed a deal for a $20 billion exchange rate stabilization agreement with the U.S. Treasury, six days ahead of a key midterm election.

An index tracking Latin American equities (.MILA00000PUS) hit its highest in two weeks and a parallel gauge of regional currencies (.MILA00000CUS) hit its highest in a week and a half.

They were last up 0.97% and 0.76%, respectively.

Mexican stocks ME fell 0.56% as the market looked ahead to the third-quarter earnings season. Shares of insurance company Quálitas Q led the declines.

CHINA TRADE SHIFT OFFERS OPPORTUNITY

Separately, data from China highlighted how Latin American economies could seize the upside from the rerouting of global agricultural trade.

The second-largest economy in the world imported no soybeans from the U.S. in September, the first time in nearly seven years, while shipments from Argentina and Brazil surged.

Still, relying too much on China could be problematic, especially as the sector grapples with its own problems of weak domestic consumption and property market struggles.

Ratings agency Moody’s downgraded China Vanke 000002 as the embattled property developer grapples with an ailing liquidity crisis.

“We don’t see the right formula in China, where we can get fully compensated for the political and regulatory risks,” von Hardenberg said.

Elsewhere, Turkey’s main BIST 100 share index XU100 and its banking index (.XBANK) climbed 2.55% and 4.54%, respectively, erasing losses from earlier in the session.

JPMorgan reduced its forecast for Turkey’s interest rate cut and revised its inflation outlook higher, warning that domestic political developments posed upside risks for both benchmark rates and price pressures.

Key Latin American stock indexes and currencies: