Market Lower in Brazil Amid Fears of Higher Interest Rates

Brazilian equities declined further, pressured by interest rate fears and additional profit taking. Brazil’s market suffered from concerns over interest rate hikes at home and abroad with the U.S. earnings season getting underway this week.

Brazil’s benchmark Bovespa Index dropped 455.33 points, or 1.84%. Brazilian shares plunged, amid projections for local and foreign interest rate tightening.


The latest declines follow a slump last week after U.S. Federal Reserve officials sent out warning signals related to potential rising inflation in the U.S.


Some analysts believe that Brazil’s central bank will have difficulty easing monetary policy this year amid a rate-tightening environment overseas, with the bank having boosted rates by 1.75 percentage points since September to limit accelerated core inflation.


On that front, a Brazilian central bank market survey released early today suggested it would likely be forced to hike the benchmark Selic interest rate by up to half a point to 18.25% annually at its January meeting. Previous surveys had forecast a quarter-point increase.


Turning to research notes, a major investment bank cut its rating on Brazilian phone company Embratel Participações SA to “underweight” from “neutral,” calling the fundamental outlook poor despite the recent takeover by Mexico’s Telmex.


The bank commented that despite initial expectations, there are now “strong indications” that Telmex will not make an offer for Embratel’s preferred shares and American Depositary Receipts anytime soon, which “removes the single biggest potential catalyst we saw for Embratel shares.” Embratel’s stock tumbled.


Thomson Financial Corporate Group
www.thomsonfinancial.com

Tags:

You May Also Like

Brazil’s Petrobras Throws Half a Billion Dollars at World’s Tecnological Race

Brazilian state-controlled oil and gas multinational Petrobras plans on investing more than 1 billion ...

Brazil Is Hip in Moscow

Today marks the start of the “Brazil-Russia Fashion” exposition, a presentation of Brazilian jewelry, ...

You don’t know this Rio

We present here an unknown Rio for those willing to forgo the myth of ...

Veja’s Yankee Brazilian Teens

Brazilian leading magazine Veja tells in a special report that they took a portrait ...

Despite Tax Break, Brazil Scientists Still Drowning in Red Tape

Researchers in Brazil will no longer be hit with big import duties on research ...

In Brazil, the Boom Days Are Counted

{mosimage}The Brazilian real continues to strengthen against the US dollar, which was recently quoted ...

RAPIDINHAS

By A partida era na Central com seu relógio enorme, o maior do mundo. ...

120 Ministers of Environment in Brazil for Biodiversity Conference

Some 6,000 representatives from more than 190 countries will begin discussions on alternatives for ...

Brazilian Chicken Exports to Middle East Grow 69% to Close to US$ 1 Billion

According to figures disclosed July 14 by the Brazilian Poultry Exporters Association (Abef), the ...

Brazil Shows Arabs How to Sell More Oil by Buying Brazilian Ethanol

Promoting ethanol on the international level has been an integral part of the Brazilian ...