beyondbrics

US economic woes weighed on Latin American markets today, as a plunge in US home sales raised fears that the recovery is still lagging in one of the region’s largest trading partners.

Mexican stocks sank and the peso fell against the dollar as worries over the US, which buys 80 per cent of its southern neighbor’s exports, added to weak Mexican data, including disappointing retail sales.

“The knock-on effect of US consumption on the Mexican economy and [the peso] would be head-on from the point of view of [foreign exchange] underperformance and its obvious tight economic and financial integration [with] the US,” wrote Flavia Cattan-Naslausky of RBS in a note today.

What is most worrisome about the [Mexican] data is that it comes off of a very lower statistical base reflecting perhaps one of the most challenging years for Mexico as a result of the swine flu, escalation of drug violence in Juarez, political noise around the fiscal reform, and a laggard economic recovery on the back of the US. The broad-based slowdown suggested by the data and weakness in the non-financial services sector, underscores a difficult backdrop for ongoing recovery of domestic demand.

Mexico’s IPC fell 2.42 per cent to 31,364.89, its lowest level in seven weeks.

Wireless carrier Axtel plunged 6.36 per cent to 6.92 pesos, its biggest fall in four months. Rival América Móvil shed 3.28 percent to 30.62 pesos.

Cemex declined on fears US housing woes would sap demand for the cement the company produces. The shares fell 5.57 per cent to 10 pesos.

Retailer Kimberly-Clark de México gave up 3.43 per cent to 75.10 pesos.

In Brazil, the Bovespa gave up 1.25 per cent to 65,156.36.

Embraer, the aircraft manufacturer, dropped 3.87 per cent to 10.42 reais after one of its planes crashed in China.

Oi, the telephone company, lost 3.1 percent to 46.43 reais on concerns that value may be diluted under Portugal Telecom’s agreement to invest in Oi.

Vale, the world’s largest iron ore miner, fell 2.3 per cent to 41.33 reais after it said it would not seek to buy Canada’s PotashCorp.

Petrobras, the state-controlled oil company, declined 1.95 per cent to 26.14 reais as crude prices fell.

Chile’s blue-chip IPSA index fell 0.38 per cent to 4,506.38.

Equities
Brazil: Bovespa down 1.25% at 65,156
Mexico: IPC down 2.42% at 31,365
Chile: IPSA down 0.38% at 4,506
US: DJIA down 1.32% at 10,040
US: S&P 500 down 1.45% at 1,052

Currencies
Brazilian real stronger at 1.76 (from 1.77) to the dollar
Mexican peso weaker at 12.94 (from 12.91) to the dollar
Colombian peso weaker at 1,818 (from 1,812) to the dollar
Chilean peso weaker at 505.00 (from 504.50) to the dollar

Commodities
Brent Crude (ICE) down 1.82% at $72.28 a barrel
Light Crude (Nymex) down 2.07% at $71.59 a barrel
100oz gold (Comex) up 0.33% at $1,231 per troy ounce
Copper (Comex) down 1.64% at $323.75 a pound