Brazilian and Latin American markets advanced, yesterdat, even as U.S. shares fell amid a jump in oil prices to above US$ 57 a barrel. In economic data, U.S. non-farm payrolls rose by 110,000 in March, following a downwardly revised 243,000 increase in February, and below the anticipated gain of 220,000. January payroll data was also revised down.
Brazil’s benchmark Bovespa Index strengthened 163.18 points, or 0.61%, while Mexico’s benchmark Bolsa Index gained 37.29 points, or 0.29%. Argentina’s Merval Index surged 23.89 points, or 1.71%.
Brazilian issues rose, following the weaker-than-expected U.S. payrolls data. Traders said the employment release laid to rest concerns over aggressive U.S. interest rates hikes, as some analysts had been forecasting a hike by 50 basis points at the May 3 meeting.
The likelihood of stable monetary policy in the U.S. means investors can turn their attention to the higher returns of riskier emerging markets like Brazil.
Also in the U.S., the University of Michigan sentiment survey had a final March reading of 92.6, down from 92.9 at mid-month and 94.1 in February, and reinforcing the view that the U.S. economy is not in danger of overheating.
Brazilian mining giant CVRD stated late Thursday that German steelmaker ThyssenKrupp Stahl has agreed to pay more than 79% more for iron ore lump from CVRD’s Northern Carajás mine in 2005.
Also, paper and pulp company Votorantim Celulose e Papel shares rose, after the firm completed the acquisition of Ripasa in partnership with Suzano Bahia Sul Papel e Celulose SA.
The two companies each paid half of the US$ 549.15 million price tag to acquire 77.6% of voting shares and 46.1% of total capital in Ripasa.
Amid research notes, an analyst changed price targets on two Brazilian cellular stocks. Telesp Celular’s price target was lowered by about 20% to US$ 8.22, based on revenue concerns and a tough Brazilian market.
Telemig Celular’s target was increased by 12% to US$ 40.95, as the analyst feels the recent change in management control does not yet seem to be reflected in the market price. Both companies are still rated at “buy.”
In economic news, Brazil’s Trade and Development Ministry said its trade surplus totaled US$ 3.349 billion in March as exports brought a total US$ 9.251 billion into the country.
Elsewhere, Mexican equities firmed on construction and other hot sectors, even as the U.S. market fell. Earlier, Guillermo Prieto, president of the Mexican stock market, said investors were “already seeing a negative reaction” in the equities market due to the fight over the future of Mexico City’s popular mayor, Andres Manuel Lopez Obrador.
The supporters of Lopez Obrador planned massive demonstrations today as a congressional committee prepared to debate whether he should face criminal charges, a decision that could have a major impact on the 2006 presidential elections.
Cement maker Cemex reported it completed the sale of its U.S. Great Lakes assets to Brazil’s Votorantim Participações. Cemex intends to use the US$389.5 million in sale proceeds to pay off debt after acquiring the U.K.’s RMC Group PLC for US$5.8 billion.
Meanwhile, Argentine shares climbed, breaking out of their recent lateral trading movement, despite ongoing uncertainty about when the government will be able to settle its debt swap.
The Argentine government has postponed the debt swap settlement, originally scheduled for yesterday, pending an appeal by another holdout creditor seeking the attachment of US$7 billion in defaulted debt. Yesterday, a U.S. federal judge in Manhattan certified eight new lawsuits by holdout creditors opposing Argentina’s now-delayed US$103 billion debt restructuring.
The government has stated that it hopes the courts will move quickly so the debt restructuring can be completed, although officials have yet to be provided with a revised timeframe for when they expect issuance of the new bonds.
Analysts note that investors anticipate that the sovereign work-out will ultimately come to fruition, though the lack of a precise settlement date is keeping some market participants on the defensive.
Thomson Financial Corporate Group