Latin American Markets Trend Lower Amid Monetary Decisions and Global Tensions

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By Marco Echevarria

Resource-rich Latin American currencies and stocks actively retreated on Tuesday, steering towards a third consecutive monthly loss as investors braced for Colombia’s monetary policy announcement later in the day.

The currency and stock indexes are battling a third month of downturns, driven by the recent surge in U.S. Treasury yields. Furthermore, China’s shaky economic recovery and escalating Middle Eastern geopolitical tensions heightened market apprehensions.

October is poised to close with a 5.3% drop in regional stocks, marking widespread losses across major exchanges. Local central banks’ monetary easing strategies also contributed to the declining allure of regional currencies, forecasting nearly a 1% dip in the index.

Before Colombia’s central bank’s expected interest rate hold, the Colombian peso depreciated by 1.0%, with inflation concerns looming over the coming months.

In anticipation of a rate cut at Wednesday’s central bank meeting, the Brazilian real marginally fell by 0.1%.

Conversely, the Mexican peso edged up 0.1% on reports that the domestic economy grew for the eighth straight quarter, outperforming forecasts with robust domestic consumption and industrial activity.

In South American market movements, Brazil’s Bovespa index saw a 0.8% rise, propelled by GPA’s 6% leap following its asset sale forecast aimed at generating approximately $98.71 million.

Meanwhile, Chile’s benchmark index experienced a slight 0.4% fall.