LatAm assets slide after Trump says Iran deal 'over'
Impact of U.S.-Iran Tensions on Latin American Markets
By Utkarsh Hathi, Purvi Agarwal and Niket Nishant
Market Reaction to U.S. President Trump's Comments
July 8 (Reuters) - Latin American assets fell on Wednesday after U.S. President Donald Trump said the interim accord to end the war against Iran was over, sending oil prices higher and denting global risk sentiment.
Trump also said that the U.S. was likely to launch more strikes on Wednesday night and take over Iran's Kharg Island, after Tehran carried out new attacks on U.S. bases in the Gulf.
Oil Prices and Inflation Concerns
The comments come a day after fresh U.S. military strikes and after Washington revoked a license that allowed Tehran to sell oil internationally. Oil prices, which had returned to pre-conflict levels after the ceasefire, rose 5.3% to a two-week high. [O/R]
Inflation worries were back in the limelight, especially in oil-importing economies. International bonds in oil importers Kenya and Sri Lanka broadly dropped over 1 cent on the dollar.
Investor Sentiment and Market Outlook
"The bigger issue for investors is the upcoming inflation read-through... the ceasefire had helped contain some of the risk premium in oil; its collapse puts energy prices back at the center of the market outlook," said Lale Akoner, global market strategist for eToro.
"For now, this looks more like a repricing of risk than a fundamental change in the market outlook."
Regional Market Movements
A global selloff in risk assets ensued with Wall Street trading lower. In LatAm, attention shifted back to geopolitical risks after weeks of domestic catalysts driving markets in the region.
Performance of Key Companies and Indexes
Oil giants such as Brazil's Petrobras and Colombia's Ecopetrol gained 3.1% and 3.3% respectively, cushioning some losses on the Brazilian and Colombian benchmark indexes. Mexican equities were flat.
The broader MSCI Latin American currency index edged 0.2% lower, while the stocks equivalent declined 0.8%.
Expert Commentary
However, Derrick Irwin, co-head of intrinsic emerging markets equity at Allspring Global Investments, cautioned against overreaction.
"The direction of travel remains towards some sort of resolution, and that probably helps oil prices stay contained," he said.
Global and Regional Economic Indicators
The International Monetary Fund on Wednesday inched its 2026 global growth forecast lower again to 3.0%, warning of ongoing risks posed by the war in the Middle East, trade fragmentation and potential corrections in market expectations for AI.
The dollar index fell 0.2%. Concerns about high inflation mounted at the U.S. Federal Reserve's meeting last month, minutes of the session showed.
Currency Movements in Latin America
The Mexican peso fell 0.2%, while Peru's sol traded 0.3% lower. Chile's peso trimmed some losses and was last down 0.2% after hitting its lowest since March 27, tracking weakness in copper prices. [MET/L]
Argentina's peso rose 0.4%, while stocks lost 0.5%.
Other Global Central Bank Actions
Elsewhere, central banks in Poland and Romania held interest rates steady. The National Bank of Poland said it might intervene in the FX market.
Key Latin American Stock Indexes and Currencies
Key Latin American stock indexes and currencies:
Equities Latest Daily % change
MSCI Emerging Markets 1678.52 -0.52
MSCI LatAm 2943.29 -0.79
Brazil Bovespa 170790.79 -0.71
Mexico IPC 66632.98 -0.06
Chile IPSA 10916.85 -0.98
Argentina MerVal 3207107.99 -0.524
Colombia COLCAP 2295.22 0.03
Currencies Latest Daily %
change
Brazil real 5.1465 0.22
Mexico peso 17.5449 -0.2
Chile peso 931 -0.15
Colombia peso 3334.48 -0.12
Peru sol 3.4057 -0.26
Argentina peso (interbank) 1,487.0 0.37
Argentina peso (parallel) 1,490.0 1.68
(Reporting by Utkarsh Hathi and Purvi Agarwal in Bengaluru, editing by Deepa Babington and Jonathan Ananda)
