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Latin markets badly bruised
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September 17, 1998: 10:37 a.m. ET
Bovespa dives 10 %, Mexico slumps 4 % after Greenspan's comments
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NEW YORK (CNNfn) - Latin American markets were hammered Thursday morning after Federal Reserve Board Chairman Alan Greenspan Wednesday dashed hopes of a U.S. interest rate cut.
Brazil's key share index Bovespa plunged more than 10 percent in early trade, setting off the market's circuit breaker and halting trade for 30 minutes.
"Markets are disappointed that interest rates in the United States will not be lowered right now," said one local trader.
Prices engaged in a free-fall minutes after the open as Greenspan's speech threw cold water on a market that was starting to recover earlier this week.
Local market players were expecting Greenspan to hint at a cut in U.S. interest rates.
"Greenspan's speech yesterday disappointed the market, which was pressing for an immediate, instant solution (to the global financial crisis)," said one local trader.
Greenspan's remarks also battered Mexican stocks and currency.
The country's IPC Index shed 3.82 percent, or 130.370, to 3,284.310 Thursday morning.
"We are now absorbing what Greenspan said yesterday and are also being dragged down by the fall in Brazil," a desk trader said.
Dealers also noted that the bourse was ripe for profit taking after a gain of almost 13 percent Tuesday, its biggest percentage gain since the 1987 crash.
"There is definitely profit taking. It went up a great deal on Tuesday," a floor trader said.
Volume was moderate at 3.3 million shares in early trade. On the broad market, all 21 stocks traded were down.
Mexican peso contracts tumbled, as the widely watched 48-hour contract was 21 centavos weaker at 10.3550/10.3900 per dollar.
Venezuelan shares also were weaker Thursday morning, with the IBC index falling 1.3 percent, or 38.28 points, to 2,902.19.
-- from staff and wire reports
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