Brazilian shares posted solid gains, amid fairly healthy volumes despite the approaching Christmas holiday. Strength in the U.S. market appeared to inspire enthusiasm for Brazilian bourses, although U.S. economic news was mixed on the session. In the U.S., improving consumer sentiment and strong durable goods orders contrasted with a sharp drop in new home sales.
Brazil’s benchmark Bovespa Index rose 155.00 points, or 0.60%, Brazilian shares overcame a weak start to finish in the black, brushing off indications from the Central Bank that local interest rates may continue to increase in 2005.
Brazil’s Central Bank issued an unexpectedly hawkish interest rate outlook from the minutes of a meeting last week at which it boosted rates. The bank suggested that it is ready to keep hiking rates in order to force expectations in line with targets if needed.
Many investors had been expecting rates to stop rising in January after four consecutive monthly increases late this year. Still, the news lifted shares of Brazilian banks Banco Bradesco and Banco Itaú. Earlier, an analyst raised its 12-month price target on Itaú’s stock by 18% to 500 reais.
Buyers were encouraged by news that foreign investment is flowing back into the Brazilian market after flowing out earlier this year, as well as by gains on Wall Street.
The São Paulo Stock Exchange issued a note indicating that net foreign investment in equities was 442 million reais in the first 20 days of December and 1.2 billion reais up to now in 2004.
In other news, low-cost airline Gol Linhas Aereas Inteligentes SA soared, after beginning service on its first international route between São Paulo and Buenos Aires yesterday.
According to the company’s chief executive, Gol sold 8,400 tickets for the route in the last month, even though the marketing campaign only started this week. The CEO said that the airline expects to carry 70,000 passengers annually on the route.
Also, shares of Embraer ascended. The Brazilian aircraft maker won an order to send 16 new planes to U.S.-based Republic Airways Holdings. Republic subsidiary Republic Airlines has agreed to operate Embraer’s 170 series aircraft for the Delta Connection service of Delta Air Lines.
Thomson Financial Corporate Group