EMERGING MARKETS-LatAm stocks fall on global risk-off mood over AI concerns, FX slips

By Nikhil Sharma

Nov 18 (Reuters) - Latin American stocks fell on Tuesday as global sentiment soured amid renewed concerns over lofty AI valuations, while currencies wavered against a firm dollar as investors awaited U.S. data for clues on the Federal Reserve's next move.

MSCI's index of Latin American equities .MILA00000PUS fell 0.77%, echoing losses on Wall Street where major indexes fell 1%.

The dollar index =USD was largely steady, exerting pressure on currencies elsewhere. A broader index for LatAm FX .MILA00000CUS was down 0.24% - on pace for its third straight daily gain.

As attention turned to AI darling Nvidia's NVDA.O earnings on Wednesday, investors began to question the towering valuations of tech and AI stocks, as well as the ambitious spending pouring into the sector.

"Nvidia results are not just any earnings report; they are treated like a macro event... How it performs will have an impact on the U.S. and global financial markets. Also, if its stock price falters, then it could threaten the entire AI trade," Kathleen Brooks, research director at XTB, said in a note.

Additionally, the release of delayed U.S. data will also be a key market-moving event, especially Thursday's pivotal jobs report, which could influence the Fed's monetary policy decision next month. Odds for a December U.S. rate cut stand at 48%. 0#FEDWATCH

In LatAm, Chilean equities remained in focus after outsized gains in the previous session, following Sunday's presidential vote, which pointed to a potential victory for far-right candidate Jose Antonio Kast in next month's runoff and boosted investor optimism that a right-wing government could pave the way for more market‑friendly reforms.

The Santiago stock index .SPIPSA, which soared 3.1% on Monday, pulled back by falling 1.9%. The currency peso CLP= fell 0.8% after gaining for five consecutive sessions. Caution emerged after the economy contracted in the third quarter from the previous three-month period, as lower copper extraction affected the mining sector.

In Brazil, the currency real BRL= slipped 0.14% and the main stock index .BVSP fell 0.4%. The country's central bank effectively halted operations of mid-sized lender Banco Master, which had struggled in recent months with mounting liquidity pressures.

The move also suspended a deal involving a consortium led by investment group Fictor and investors to buy Master.

Colombia's COLCAP Index .COLCAP was flat, while the peso COP= gained 0.6% ahead of the third-quarter GDP data at 11:00 a.m. ET.

The Mexican peso MXN= and the benchmark S&P/BMV IPC index .MXX were little changed for the day. In Argentina, the local peso ARS=RASL flattened, while the benchmark stock index .MERV lost 1.5%.

Overall, 2025 painted a bright picture for emerging economies, with Latin America among the biggest beneficiaries so far, as the region's higher interest rates attracted strong inflows and soaring commodity prices bolstered its resource-dominated markets.

A standout was Brazil's Bovespa stock index, which has risen 30% this year, outpacing Wall Street's S&P 500 12.4% gain and withstanding U.S. President Donald Trump's tariff actions. The year also belonged to Colombia, whose stocks skyrocketed over 50% this year.

But a BofA survey also warned the EM remain highly susceptible to any risk-off move in the last quarter of 2025, citing their unprecedented rally and fading hopes for a December Fed rate cut.

In Central-Eastern Europe, Hungary's central bank left its base rate steady at the European Union's joint-highest 6.5% on Tuesday amid fiscal loosening and an uncertain inflation outlook after next year's parliamentary election.

The forint EURHUF= fell 0.2% and Budapest stocks .BUX dropped 1.2%.

Key Latin American stock indexes and currencies: