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Latam FX up 0.2%, stocks up 0.75%

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Brazil's industrial activity contracts in May

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Brazil economists see 2025 inflation at 5.46%, poll shows

By Nikhil Sharma

June 2 (Reuters) - Latin American assets firmed on

Monday, capitalizing on a weaker dollar and higher commodity

prices against the backdrop of another shift in U.S. President

Donald Trump's trade policies, particularly his plans to double

metal tariffs.

MSCI's index of Latin American equities rose

0.75%, while a parallel index for currencies was

up 0.2%.

The dollar index fell 0.7% to hit its April 22 low.

A layer of uncertainty shrouded global investors after Trump

on Friday threatened to double duties on imported steel and

aluminum to 50% from Wednesday.

That came hours after he accused Beijing of violating an

agreement with the U.S. to mutually roll back tariffs and trade

restrictions for critical minerals.

On Sunday, U.S. Treasury Secretary Scott Bessent said Trump

would soon speak with Chinese President Xi Jinping to settle a

dispute over critical minerals.

Trump's on-again-off-again trade war has been detrimental to

U.S. assets, which have lately been losing their safe-haven

appeal, prompting investors to look for alternatives

internationally.

"Overall level of uncertainty and lack of reliability in the

U.S. continues to feed one narrative, and that is

diversification away from the dollar," said Alejandro Cuadrado,

global head of FX and LatAm Strategy at BBVA.

Mexico's peso was the top-performing currency for the

day, up 1.2%, influenced by a monumental jump in oil prices

after producer group OPEC+ kept output increases in July

unchanged, defying expectations.

Revenues from oil exports constitute a significant chunk of

overall income for Latin American economies. Mexico and Brazil

are two of the biggest oil producers in South America.

Mexico's equity markets were steady for the day, with

Walmart's Mexico unit rising 2%.

The country voted in its first-ever judicial elections on

Sunday, as part of its efforts to reform the nation's judiciary

that critics warn could jeopardize the rule of law. The election

results are expected on June 15.

In Brazil, the local real gained 0.6% against the

greenback. The country's main stock index added 0.2%,

boosted by energy and mining stocks.

Gains were restricted, however, by a survey revealing a

contraction in Brazil's industrial activity in May, the first in

17 months, hit by lackluster demand.

Economists polled by Brazil's central bank expect the

inflation rate to hit 5.46% by the end of this year, according

to a fresh survey, down from the 5.50% forecast a week earlier.

The week is packed with key data for Latin America's biggest

economy, including industrial output for April, alongside trade

balance and PMI numbers for May.

Meanwhile, the Chilean peso strengthened 0.8%,

powered by higher copper prices. The country is the world's

largest copper producer.

Elsewhere, Ukrainian bonds slipped as the second round of

peace talks between Russia and Ukraine ended in barely an hour.

International bonds, with 2041 maturity, fell about 2 cents

to the dollar.

Key Latin American stock indexes and currencies:

Stock indexes Latest Daily % change

MSCI Emerging Markets 1153.42 -0.34

MSCI LatAm 2228.8 0.68

Brazil Bovespa 137041.45 0.01

Mexico IPC 57823.27 -0.03

Chile IPSA 8037.74 -0.12

Argentina MerVal 2254470.13 -1.08

Colombia COLCAP 1608.9 -1.69

Currencies Latest Daily % change

Brazil real 5.6887 0.59

Mexico peso 19.2062 1.06

Chile peso 938.05 0.71

Colombia peso 4150.3 0.05

Peru sol 3.6132 0.11

Argentina peso (interbank) 1,185.5 0.38

Argentina peso (parallel) 1,155.0 2.12