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LatAm assets slide with global markets after Trump says Iran deal ‘over’

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July 8 : Most Latin American assets fell on Wednesday after U.S. President Donald Trump said the interim accord to end the war with 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.

The comments come a day after fresh U.S. military strikes and Washington revoking a license that allowed Tehran to sell oil internationally. Oil prices, which had returned to pre-conflict levels after the ceasefire, rose 5 per cent 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 earlier in the session, but pared some declines. 

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“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.”

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. 

Oil giants such as Brazil’s Petrobras and Colombia’s Ecopetrol gained 3 per cent and 4.7 per cent respectively, cushioning some losses on the Brazilian and Colombian benchmark indexes. Mexican equities dropped 0.9 per cent.

The broader MSCI Latin American currency index edged 0.5 per cent lower, while the stocks equivalent declined 1.4 per cent.

The International Monetary Fund on Wednesday inched its 2026 global growth forecast lower again to 3.0 per cent, warning of ongoing risks posed by the war in the Middle East, trade fragmentation and potential corrections in market expectations for AI.

Turkey’s economic growth forecast was nudged lower to 2.9 per cent from 3.4 per cent – a second time this year. 

Currency markets were mixed as the dollar index held steady ahead of the release of minutes from the Federal Reserve’s June policy meeting, which investors will scrutinize for clues on the interest-rate outlook. 

The Mexican peso fell 0.6 per cent, while Peru’s sol traded 0.3 per cent lower. Chile’s peso fell the most among peers and was at its lowest since March 27, down 0.8 per cent, tracking weakness in copper prices.

Argentina’s peso was flat, while its stocks gained 0.5 per cent. 

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:

MSCI Emerging Markets 1675.21 -0.72

MSCI LatAm 2925.55 -1.39

Brazil Bovespa 170412.5 -0.93

Mexico IPC 66099.37 -0.86

Chile IPSA 10928.21 -0.88

Argentina MerVal 3239983.39 0.5

Colombia COLCAP 2285.92 -0.37

Currencies Latest Daily per cent

change

Brazil real 5.1563 0.03

Mexico peso 17.6074 -0.56

Chile peso 936.69 -0.76

Colombia peso 3344.39 -0.42

Peru sol 3.4064 -0.28

Argentina peso (interbank) 1,492.0 0.03

Argentina peso (parallel) 1,500.0 0.99

Source: Reuters

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