China battery tax pressures SQM as LatAm FX weakens

A global risk aversion swept through financial markets, driving the dollar higher against almost every Latin American currency. Equities across the region faced selling pressure, led by sharp declines in technology and lithium stocks.

Currency markets reflected the flight to safety. The Bolivian bolivar tumbled 4.37% against the dollar, while the Guatemalan quetzal and Paraguayan guarani lost 2.73% and 1.81% respectively. The Brazilian real slipped 0.19% to 5.11, and the Mexican peso declined 0.59% to 17.53.

In Santiago, the IPSA index dropped 0.56%, dragged down by the lithium sector. SQM fell 0.91% after China implemented a new battery tax, threatening demand for the metal. Global lithium prices retreated 0.70% to 68.38, compounding the bearish sentiment.

Brazil's Ibovespa closed down just 0.06%, masking significant divergence among its constituents. High-growth financial and technology stocks suffered, with MercadoLibre sliding 2.34% and Nubank losing 1.45%. Consumer names also retreated, with meatpacker JBS dropping 1% and retailer Vivara falling 3.90%.

Energy stocks provided a regional buffer as oil prices surged. Brent crude jumped 4.59% to 88.10 and WTI advanced 3.58% to 81.78. Petrobras rose 2.53% in São Paulo, while Argentina's YPF gained 2.40% to help the Merval climb 0.46%.

Agricultural commodities showed sharp divergences that hold implications for regional exporters. Corn soared 5.89% and cocoa spiked 10.30%, but coffee plunged 5.17%. Beef and cattle prices both fell more than 2%.

The LatAm weakness mirrored steep losses in global benchmarks and shifting commodity demand. The Korean Kospi plunged 6.37%, the Nikkei lost 4.03%, and the US Nasdaq composite fell 1.49%. Copper, a critical regional export, dropped 0.49% to 6.27, while the CBOE Volatility Index surged 12.19% and the US 10-year yield fell 0.61% to 4.5410%.