Latam markets jump as Mexican peso leads the charge amid U.S. tariff speculations

* Mexico FX, stocks, set for best day since November * Argentina country risk index falls * Colombian markets closed * MSCI Latam stocks index up 2%, FX index up 1% (Updates to mid-session trading) By Lisa Pauline Mattackal and Pranav Kashyap Jan 6 (Reuters) – Latin American markets jumped on Monday, with the Mexican peso at the forefront of a regional rally following a report that the U.S. tariffs under President-elect Donald Trump could be lower than feared. According to the Washington Post, Trump’s team is considering targeted tariffs that would focus only on critical imports from all countries. Although Trump disputed these claims on Truth Social, the suggestion his moves might be less severe than threatened was enough to invigorate the markets. This news propelled the Mexican peso up 1.39% against the dollar, while the country’s main stock index also leaped as much as 1.7%, buoyed by optimistic sentiment. Both were on track for their best day since November. Other Latin American markets jumped as the U.S. dollar slid after the report, with MSCI’s gauge of regional currencies up 1% at the highest in more than two weeks. An index of Latin American stocks rose nearly 2%, on pace for its best day since August. “If we’ve learned anything over the years, it’s that Trump is unpredictable. He loves shaking up markets, but the final outcomes are often less dramatic than his initial announcements,” said ING analysts in a note. The specter of Trump’s proposed 25% tariffs on Mexican and Canadian imports, along with a steep 60% tax on Chinese goods, had previously cast a shadow over emerging market currencies. The Mexican peso suffered its largest annual decline since 2008. However, the potential for lower tariffs now offers a glimmer of hope. The dollar’s run to two-year peaks over the past month, due to concerns about the potential inflationary impact of Trump’s policies and expectations for fewer U.S. interest rate cuts, has also weighed heavily. Scotiabank’s chief FX strategist, Shaun Osborne, said news of more moderate tariffs could “take some of the steam out of the dollar’s appreciation trend.” Other EM currencies rose, with the South African rand jumping nearly 1% Brazil’s government said in a statement that Indonesia is formally joining BRICS as a full member. Elsewhere, traders said Argentina’s country risk index, which measures the yield spread on its bonds versus U.S. debt, fell under the 600-basis-point barrier for first time since 2018. Argentina’s stock index jumped 2.36% to a record high. Stock indexes in Brazil and Peru rose 1.1% and 1.2%, respectively. Brazil’s real rose 1.1% and the Chilean peso was up 0.5%. Venezuela’s government said it will break diplomatic relations with Paraguay and remove its diplomats from the South American country. HIGHLIGHTS ** Chile central bank mulled keeping rates unchanged in December, minutes show ** Mexico s/a consumer confidence at 47.1 in December Key Latin American stock indexes and currencies: Equities Latest Daily % change MSCI Emerging Markets 1080.47 0.68 MSCI LatAm 1879.45 2 Brazil Bovespa 119886.07 1.14 Mexico IPC 49409.07 0.92 Chile IPSA 6780.66 1.19 Argentina MerVal 2793412.92 2.36 Colombia COLCAP 1396.23 -0.24 Currencies Latest Daily % change Brazil real 6.1088 1.14 Mexico peso 20.3314 1.39 Chile peso 1010.94 0.51 Colombia peso 4339 0.28 Peru sol 3.76 0.19 Argentina peso 1,034.5 -0.15 (interbank) Argentina peso 1,185.0 1.66 (parallel) (Reporting by Lisa Mattackal in Bengaluru; Editing by Angus MacSwan and Cynthia Osterman)