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LatAm stocks up 1.9%; FX up 0.3%

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Brazil's central bank expected to keep rates at 15%

(Updates with afternoon trading)

By Pranav Kashyap and Sukriti Gupta

Nov 5 (Reuters) - Most Latin American currencies and

stocks rose on Wednesday, as risk-on sentiment returned to

global markets following a sell-off in the previous session,

while investors awaited Brazil's interest rate decision.

A sharp rebound in U.S. private payrolls in October also

aided sentiment. Meanwhile, the lawyer representing U.S.

President Donald Trump's administration faced tough questions

from the Supreme Court over the legality of the sweeping

tariffs.

The real rose 0.7%, while stocks in Sao Paulo

climbed to a record high, up 1.6%, and were set to log their

11th consecutive day of gains, the longest streak since July

2024.

Brazil's central bank is widely expected to hold the Selic

rate at 15%, a near two-decade high, keeping pressure on

stubborn inflation that is still overshooting its 3% target.

A towering yield gap over the U.S. Federal Reserve's

3.75%-4% target range has supercharged carry trades and foreign

inflows, helping the real, which is up 15% year-to-date.

But with growth showing signs of cooling, investors will

dissect the central bank's statement for hints of when cuts

might finally come, potentially not until 2026, and how

vulnerable the currency remains to shifts in U.S. policy and

risk appetite.

"The Brazilian central bank has been conducting monetary

policy in a consistent and right direction because inflation has

shown some stubbornness throughout the year. The strong monetary

restriction is really domesticating Brazilian inflation," said

Alfredo Coutino, director for Latin America at Moody's

Analytics.

"My impression is that (the bank) will keep the policy rate

at 15% in nominal terms until the end of this year."

Latin American assets are riding a wave of global portfolio

rebalancing this year, as investors pivot away from U.S. markets

in search of higher yields and calmer political waters.

Countries like Brazil and Chile have emerged as favorites,

not only for their attractive interest rates, but also for

offering a relatively quieter political backdrop and more

predictable macro environments.

Valuation fears resurfaced this week on Wall Street and in

Asia that have had record-breaking runs this year, driven

primarily by enthusiasm for artificial intelligence.

An index tracking the region's equities rose

1.9%, hitting its highest since January 2024, while a similar

gauge for currencies ticked up 0.3%.

The Mexican peso gained 0.4%, while equities,

up 1.8%, hit an all-time high.

Unlike Brazil, Mexico's central bank is primed to cut rates

on Thursday, as Banxico looks to jump-start an economy that

could have shrunk in the third quarter.

Recent data showed headline inflation cooled more than

expected in mid-October, but a sticky core still sits above the

3% target. A poll showed Mexico's headline inflation is expected

to ease in October, further adding to bets for a rate cut.

Chile heads into a pivotal vote in less than two weeks, with

ruling-coalition contender Jeannette Jara leading ahead of the

November 16 first round, a recent poll suggests. Chile's peso

rose 0.4%, while the local stock index added

1.2%.

Argentine stocks declined 1.5%, while the local peso

added 0.3%. Argentina's central bank cut its one-day

peso repo rate by 300 basis points to 22%, Bloomberg News

reported.

Colombia's main stock index hit a fresh peak, up

0.9%, while the peso gained 0.8%.

Key Latin American stock indexes and currencies:

Equities Latest Daily %

change

MSCI Emerging Markets 1385.15 -0.59

MSCI LatAm 2621.36 1.98

Brazil Bovespa 153102.76 1.59

Mexico IPC 63563.9 1.88

Chile IPSA 9432.13 1.17

Argentina Merval 3032909.57 -1.55

Colombia COLCAP 2036.53 0.9

Currencies Latest Daily %

change

Brazil real 5.3609 0.67

Mexico peso 18.5846 0.43

Chile peso 943.17 0.35

Colombia peso 3832 0.84

Peru sol 3.369 0.44

Argentina peso (interbank) 1449.5 0.3

Argentina peso (parallel) 1420 -8.8