EMERGING MARKETS-LatAm stocks, currencies mixed as investors weigh US-Iran deal

MSCI LatAm stocks down 0.6%, FX off 0.7%

Brazil and Chile central bank decisions due Wednesday

Lula widens lead over Flavio Bolsonaro in Brazil election second-round, poll shows

By Ragini Mathur and Avinash P

- Latin American stocks and currencies were mixed on Tuesday, after rising in the previous session, as investors weighed an interim U.S.-Iran peace deal and looked ahead to a string of key central bank decisions this week.

The deal would extend a fragile ceasefire announced in April by another 60 days and reopen the Strait of Hormuz.

Still, doubts remained over whether the agreement could bring a lasting solution, with shipping flows and energy exports expected to take weeks to recover, although U.S. President Donald Trump said on Tuesday the text would be made public soon.

"We have not seen a lot of details about the MOU, and there is still a lot of scope for Iran and the U.S. to believe the other party is not standing up to its part of the agreement," said Rachel Ziemba, geopolitical and macro risk analyst and founder of Ziemba Insights.

The U.S. dollar hovered near 10-day lows. The moves were muted before the Federal Reserve's policy decision on Wednesday.

A hawkish Fed signal could lift the dollar and pressure emerging-market currencies.

Brazil and Chile's central banks are also due to announce rate decisions on Wednesday.

MSCI's Latin American stocks index .MILA00000PUS was down 0.6%, while the currencies gauge .MILA00000CUS was down 0.7%. Both indexes were on track to snap a three-day winning run.

Brazil's President Luiz Inacio Lula da Silva extended an advantage over Senator Flavio Bolsonaro in a potential runoff in the October general elections, a CNT/MDA poll showed. The Bovespa stock index .BVSP fell 0.7%, while the real BRL= depreciated 0.8%.

Colombia's stock index .COLCAP was down 1.2%, while the peso COP= gained 1.6%, hitting its strongest levels since December 2020.

Voters in Colombia head to the polls on Sunday to choose between right-wing lawyer Abelardo De La Espriella and leftist senator Ivan Cepeda. Economists, policymakers and investors say the next president will face limited room to advance his economic agenda amid worsening fiscal pressures and a divided Congress.

Elections were also in focus in Peru, where ballots from this month's presidential runoff were still under review. Conservative Keiko Fujimori held a narrow lead over leftist Roberto Sanchez. Peruvian stocks were up 0.6%, while the sol PEN= gained 0.7%.

Mexican stocks .MXX were 0.3% higher, while the peso MXN= was muted. U.S. and Mexican negotiators met in Washington on Tuesday for a second round of talks aimed at revamping the North American trade agreement, as Trump continued to question the future of the 32-year-old free-trade zone with Canada and Mexico.

"USMCA is critical for Mexico, but it is also critical for the United States and U.S. manufacturing," Ziemba said.

"Even if the talks break down, they are likely to resume. But these talks are going to be a driver of volatility in Mexican assets."

Elsewhere, Bloomberg News reported on Monday that the government in Bolivia told investors that foreign-exchange unification and an International Monetary Fund deal were nearing.

Key Latin American stock indexes and currencies at 14:39 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1776.65

0.72

MSCI LatAm .MILA00000PUS

2997.23

-0.62

Brazil Bovespa .BVSP

169237.61

-0.69

Mexico IPC .MXX

68432.02

0.33

Chile IPSA .SPIPSA

10913.92

0.33

Argentina MerVal .MERV

3298403.69

-1.62

Colombia COLCAP .COLCAP

2358.62

-1.18

Currencies

Latest

Daily % change

Brazil real BRL=

5.0994

-0.78

Mexico peso MXN=

17.215

0.01

Chile peso CLP=

887.12

0.29

Colombia peso COP=

3433.7

1.62

Peru sol PEN=

3.3773

0.66

Argentina peso (interbank) ARS=RASL

1,432.5

-0.17

Argentina peso (parallel) ARSB=

1,445.0

-0.35