Markets across Latin America moved lower on Wednesday as a shift away from risk assets took hold, driven by renewed concerns over possible escalation in Iran and fresh trade tensions with the United States.
The MSCI index that tracks Latin American equities fell 1.6%, while a regional currency index eased by 0.4% as traders favored safer assets.
Brazilian equities were among the weakest in the region, sliding 1.8% after Washington proposed a new 25% punitive tariff covering many imports from Brazil. U.S. trade chief Jamieson Greer characterized the tariff as a response to what he called unfair trade practices, pointing to matters ranging from digital trade to illegal deforestation.
Brazil’s president Luiz Inacio Lula da Silva expressed surprise at the move and said the country "could not accept the treatment" it had received from the United States.
Mexico’s equity market fell more modestly, down 0.1%, while the peso lost 0.2% against a stronger U.S. dollar. In Argentina, the Merval index dropped 1% and the peso slipped 0.3%.
Colombian equities declined 1.2%, registering their first decline of the week. Earlier in the week, risk appetite in Colombia had been bolstered by the strong showing of right-wing candidate Abelardo de la Espriella in the first round of the presidential election, a development that had supported local assets.
Overall, the combination of geopolitical concerns tied to Iran and the specter of higher U.S. tariffs on Brazilian goods pushed regional investors toward caution, weighing on both stock indexes and regional currencies.
Market data referenced: MSCI Latin America -1.6%; regional currency index -0.4%; Brazilian equities -1.8%; Mexico -0.1% (equities); MXN -0.2% vs USD; Argentina Merval -1.0%; Argentine peso -0.3%; Colombia -1.2%.
Context notes: Officials and political leaders made public statements reacting to the tariff proposal, while political developments in Colombia earlier in the week had supported risk assets before the midweek pullback.