By Carla Mozee
Major Latin American currencies and stock indexes tumbled
Thursday as part of a global selloff, with fears about Europe's
debt crisis continuing to have a stranglehold on the markets.
Brazil's Bovespa equity index slumped 2.8%. The broad-based
losses pushed the index that tracks the region's biggest stock
market further into the red for the year, by 15%. Mexico's IPC fell
2%, Argentina's Merval lost 3.6% and Chile's IPSA gave up 1.7%.
On Wall Street, the S&P 500 Index (SPX) recently fell 2.3%.
The index has fallen from its 19-month high on April 23 by more
than 10%, a level usually considered a correction.
Fears that debt problems in Europe will eventually hurt global
economic recovery, and that European officials still remain
uncoordinated in their response, have intensified in recent weeks.
But even in the absence of solid news developments on a given day,
"anytime the psychology turns so quickly," any excuse to sell is
deemed as valid for investors, said Bruce Zaro, chief technical
strategist as Delta Global Advisors.
"The euro crisis could spread...or it could not rain...or
they're just in no mood to buy stocks," he said. Whatever their
reasoning, investors are in the mindset to run from perceived risk,
he said.
Among exchange-traded fund, the iShares MSCI Brazil Index Fund
(EWZ) tumbled 4.5%. The iShares MSCI Mexico Index Fund (EWW) gave
up 3.7% and the iShares MSCI Chile Investable Market fund (ECH)
fell 1.6%.
Brazil's currency, the real, dropped more than 3% against the
U.S., while Chile's peso lost more than 1%.
Mexico's peso skidded more than 2.5% lower, with investors
setting aside a report showing that Mexico's economy expanded by
4.3% in the first quarter of this year from the year-ago period.
Analysts polled by Dow Jones Newswires had expected growth of 3.8%.
Gross domestic product declined 0.35% on a seasonally adjusted
basis from the fourth quarter of 2009.
Along with worries about fiscally vulnerable countries in the
euro zone came gloomy economic reports from the U.S. on Thursday.
Weekly jobless claims unexpectedly rose and the Conference Board's
index of leading economic indicators fell 0.1% in April, the first
monthly decline since March 2009.
In Sao Paulo trading, shares of market heavyweight and oil giant
Petrobras (PBR) fell 2.1% as a climb in the U.S. dollar pressured
the energy market, where prices are denominated in dollars. Crude
for June delivery fell 4% to $67.02 a barrel recently. Preferred
shares of Petrobras have tumbled nearly 24% this year.
The company's chief executive, Jose Sergio Gabrielli, has said
the shares have been hurt by uncertainty surrounding a plan under
which the government proposes to grant Petrobras rights to explore
and develop 5 billion barrels of crude in exchange for new shares
in Petrobras. A vote on the swap plan is expected to be held on
June 9, according to a Dow Jones Newswires report.
In Mexico, market heavyweight America Movil (AMX) fell 1.7% and
decliners were led by a 5.6% fall in shares of airport operator
Asur (ASR). Shares of cement maker Cemex (CX) slumped 1.8%.