Latin American currencies and stock markets moved higher on Monday as investors reacted positively to signs of diplomatic progress between the United States and Iran, easing fears of a broader geopolitical escalation and pushing oil prices sharply lower.
MSCI’s index tracking Latin American currencies rose 0.5%, while the region’s stock index gained 0.8% during trading. Market activity remained relatively light due to the U.S. Memorial Day holiday closure.
Investor sentiment improved after U.S. Secretary of State Marco Rubio stated that Washington would continue pursuing diplomacy with Iran before considering alternative measures. President Donald Trump also said negotiations were progressing positively.
The prospect of easing tensions triggered a sharp decline in oil prices, which fell roughly 5% to two-week lows. Lower energy prices helped ease inflation concerns that had recently pressured global markets and complicated expectations for interest-rate cuts.
Analysts at LMAX Group said markets were rewarding signs of diplomatic progress, though they warned that sentiment could quickly reverse if negotiations weaken or geopolitical tensions intensify again.
Among emerging markets, South African assets recorded some of the strongest gains. The rand strengthened 1% against the U.S. dollar, reaching its highest level in more than two weeks, while the country’s stock market climbed 2.6%.
South Africa also received support from Moody’s, which upgraded its outlook on the country to positive from stable, citing improving fiscal performance and ongoing structural reforms.
In Latin America, Colombia’s peso jumped 1.4% to its strongest level since April 30, while local equities gained 1.3%. Political developments also drew investor attention ahead of the country’s upcoming presidential election.
A recent poll showed right-wing candidate Abelardo De La Espriella gaining significant support and nearly catching leftist candidate Ivan Cepeda, who had previously led surveys and was expected to continue President Gustavo Petro’s policy direction.
Chile’s peso strengthened 1.1%, while the IPSA stock index advanced 1.8% to a two-week high. Gains were supported by stronger copper prices, with the metal rising nearly 1% during the session.
Mexico’s peso and Brazil’s real also appreciated, while equity markets in both countries posted modest gains of around 0.4%.
Investors are increasingly focused on upcoming negotiations between Mexico and the United States regarding the USMCA trade agreement, which analysts view as a key catalyst for Mexican markets in the months ahead.
Meanwhile, Bolivia continued to face domestic economic tensions. President Rodrigo Paz announced a 50% cut to his salary as part of efforts to calm widespread protests linked to austerity measures and rising living costs.
Argentina’s financial markets remained closed for a public holiday.
Overall, declining oil prices, easing geopolitical fears, and improving investor appetite for risk assets helped support broad gains across emerging and Latin American markets.