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

• Oil prices surged 5% after Trump revoked Iran's oil export license and announced likely additional strikes, reigniting inflation concerns particularly for oil-importing economies like Kenya and Sri Lanka
• Brazilian oil giant Petrobras gained 3% and Colombia's Ecopetrol rose 4.7% on higher oil prices, partially cushioning broader market losses in the region
• Chile's peso fell 0.8% to its lowest level since March 27, leading regional currency declines alongside copper price weakness, while Mexico's peso dropped 0.6%

LatAm Assets Decline Amid Renewed U.S.-Iran Tensions

Key Developments:

Latin American markets fell on Wednesday after U.S. President Donald Trump declared the interim Iran accord "over," triggering global risk-off sentiment and sending oil prices 5% higher to two-week highs. Trump indicated additional strikes were likely and threatened to take over Iran's Kharg Island following new attacks on U.S. Gulf bases.

Market Performance:

• MSCI LatAm stocks index declined 1.4%
• MSCI LatAm currency index fell 0.5%
• Brazil's Bovespa dropped 0.93%
• Mexico's IPC declined 0.86%
• Chile's IPSA fell 0.88%
• Argentine MerVal gained 0.5% (outlier)

Currency Movements:

The Mexican peso weakened 0.6%, while Chile's peso fell 0.8% to its lowest level since March 27, tracking copper price weakness. Peru's sol declined 0.3%.

Winners:

Oil giants benefited from higher crude prices. Brazil's Petrobras rose 3% and Colombia's Ecopetrol gained 4.7%, partially cushioning benchmark index losses.

Economic Forecasts:

The IMF lowered its 2026 global growth forecast to 3.0%, citing Middle East conflict risks, trade fragmentation, and potential AI market corrections. Turkey's economic outlook was downgraded to 2.9% from 3.4%.

Inflation Concerns:

Analysts warned of renewed inflation pressures, particularly for oil-importing economies. International bonds in Kenya and Sri Lanka dropped over 1 cent on the dollar before paring losses.

Central Bank Actions:

Poland and Romania held interest rates steady, with Poland's central bank noting potential FX market intervention.

Market Outlook:

Strategists characterized the move as a "repricing of risk" rather than a fundamental shift, with inflation readings becoming the key investor focus.