LatAm currencies weaken as Asian equities lead global sell-off, oil surges
A broad global risk-off sentiment pushed major Asian indices down sharply and drove Latin American currencies lower against a strengthening dollar, while oil prices surged more than 4%.
Global equities declined sharply, with Asian markets bearing the brunt of the sell-off. The Kospi plunged 6.37%, while the Nikkei dropped 4.03% and the CSI 300 fell 3.60%. European and US markets followed the downward trend, with the S&P 500 declining 0.83% and the DAX dropping 0.34%. The CBOE Volatility Index jumped 7.83% to 18.04, signaling a marked increase in investor anxiety.
Latin American currencies weakened significantly as the dollar firmed, raising the local cost of dollar-denominated debt and imports across the region. The Bolivian boliviano fell 4.37%, the Guatemalan quetzal dropped 2.73%, and the Chilean peso declined 1.00%. The Mexican peso weakened 0.58% to 17.53 per dollar, even as the local IPC index dropped just 0.08%.
Despite the currency pressure, Brazil's Ibovespa index was virtually flat, closing down just 0.03% at 173,768.17. State-controlled Petrobras gained 2.43% to lead the benchmark higher, buoyed by the rising oil price. Conversely, the financial sector dragged on the index, with Itaú Unibanco falling 1.13% and Banco do Brasil dropping 1.30%.
Energy prices drove the broader commodity complex higher. Brent crude surged 4.46% to $87.99, and WTI jumped 3.60% to $81.79. Agricultural commodities also rallied, with corn soaring 5.83% and cocoa jumping 7.55%. Industrial metals saw mixed results, with copper declining 0.49% and lithium dropping 0.73%.
Gold provided a traditional haven, rising 0.74% to 4,015. Brazil's benchmark Selic rate held steady at 14.25%, while US 10-year Treasury yields dipped 0.53% to 4.5450%. Meatpacker JBS slid 2.24% amid a broader decline in livestock prices, with beef futures falling 2.82%.
