Brazilian and Latin American equities rose on optimism regarding the latest inflation-related news out of Brazil. Elsewhere, a number of regional markets were closed in the lead up to Easter.
Brazil’s benchmark Bovespa Index rebounded 453.61 points, or 1.73%, while Chile’s IGPA Index added 37.27 points, or 0.40%.
In U.S. economic news, initial jobless claims rose by 3,000 to 324,000 in the week that ended March 19. Economists had expected claims to come in at 319,000. Meanwhile, durable goods orders rose 0.3% to US$200.81 billion in February after falling 1.1% in January.
Economists had forecast a 0.6% rise in February orders. Also, new home sales jumped 9.4% in February to 1.226 million after declining an upwardly revised 8.6% in January. Economists had forecast a sales rise of 4.0% to 1.150 million.
Brazilian issues recovered from a four-day selloff, amid signs inflation is easing and hopes that will bring a speedy conclusion to an ongoing monetary tightening cycle.
The market’s declines erased 6.5% from the main Ibovespa equity index since the end of last week, following the Brazilian central bank’s interest rate hike and exacerbated by the Federal Reserve’s decision to boost lending rates and warnings of mounting inflationary pressures in the U.S. economy.
In minutes released from its latest policy meeting, the Brazilian central bank suggested a cautious view on inflation risks and highlighted ongoing pressures outside Brazil.
However, market watchers gave the notes a positive reading nonetheless, taking the comments as less hawkish than some made in recent months.
Last week, the bank raised its benchmark Selic interest rate by a half a percentage point to 19.25% annually, based on seasonal domestic price adjustments, high oil prices and the prospect of rising U.S. interest rates, which heightened the risks present in the economy.
Additionally, the IBGE statistics institute said the IPCA inflation index rose just 0.35% in the mid-March reading after gaining almost 0.60% in January and February.
In the month through mid-February, the IPCA still remained at 0.74%. The IPCA is used to guide monetary policy and the report contributes to hopes the bank’s monetary tightening cycle may soon end.
Elsewhere, Mexico’s market was closed for the Holy Week holidays preceding Easter. Yesterday, the Bank of Mexico implemented its ninth-straight month of monetary tightening, stemming from continued inflationary pressure.
The bank raised its money market liquidity restriction, or “corto,” to 79 million pesos daily from 77 million pesos, explaining that while overall inflation had fallen “significantly,” core inflation remains at “relatively high” levels.
Separately, Argentina’s market was also shut for the Easter holidays.
However, Chilean stocks were bolstered on investor optimism regarding export- and commodity-related shares, according to traders, as rising commodity prices drove interest in those firms associated with commodity production or export.
Thomson Financial Corporate Group