Latin American Markets Rebound as Rumors Concerning Argentine Currency Are Dispelled
Major Latin American markets, under pressure earlier this week from rumors about Argentina's currency, rebounded. But the mood remains cautious following the U.S. Federal Reserve's shift to a bias in favor of tightening interest rates.</br></br>The currency rumors, immediately denied by the Argentine government, were further dispelled late Wednesday when a former economy minister denied having said Argentina should float the peso anytime soon. Domingo Cavallo's calming words helped lift Argentina's Merval Index 1.2%, partially offsetting a 4.3% decline during Wednesday's session. Mexico's IPC Index bounced back 1.2%.</br></br>But another interest-rate cut in Brazilits fourth in three weeks-failed to inject much life into the Bovespa, which was flat for most of yesterday's session. That suggests to some investors this highflying market could have reached an inflection point, where anticipated interest-rate cuts will no longer automatically power the Bovespa higher.</br></br>"This the first time I can remember that the Brazil market failed to go up after good news," said Stephen Oler, senior portfolio manager for Latin America at Putnam Investments in Boston. "It means that the market may need to consolidate before resuming its advance."</br></br>In other markets, Asian stocks enjoyed a slight rebound of their own, though South Korea's Kospi Index continued to slide. European stocks, led by the telecommunications sector, propped up most major markets.