US Drawing Money Back from Brazilian Market

Latin American markets fell, as Brazil and Mexico added to declines posted yesterday, while Argentina witnessed a mild rebound. A more substantial drop in crude oil prices was not enough to entice buyers, for the most part, ahead of today’s weekly U.S. update on inventories.

Brazil’s benchmark Bovespa Index receded 368.31 points, or 1.39%, while Mexico’s benchmark Bolsa Index tumbled 292.68 points, or 2.32%. Argentina’s Merval Index advanced 18.77 points, or 1.35%.


Brazilian shares continued to slide, despite crude oil prices that finished at the very low end of US$ 56 a barrel. Still, investors appeared hesitant ahead of todat’s weekly U.S. inventory report, which is expected to show an increase in crude stocks, while gasoline and distillates could slide again, following declines in last week’s report.


A drop in gasoline stocks could spark trader concern ahead of higher U.S. demand during driving season, which begins at the end of May.


Traders said foreign funds are increasingly moving assets out of emerging market stocks and into U.S. Treasurys. U.S. Treasurys were volatile today.


Federal Reserve Chairman Alan Greenspan made no mention of future U.S. monetary policy during a keynote speech at the National Petrochemical and Refiners Association. Greenspan did, however, note that rising crude inventories could curb the current “price frenzy.”


Meanwhile, utility stocks bounced back from Monday’s decline. A disappointing power auction over this past weekend sent the group lower. Today, Cemig powered higher.


In economic reports, Brazil’s industrial capacity rose 81.9% in February from 80.9% a year ago, according to the National Confederation of Industries. A jump in industrial sales was cited for February’s advance.


Mexico shares also added to Monday’s declines. Investors are awaiting Thursday’s vote by the full lower house of Congress regarding whether to strip Mexico City Mayor Andres Manuel Lopez Obrador of his political immunity. Analysts observe that the political tension caused by the situation is hurting regional markets.


Within the telecom group, Mexican wireless firms finished bidding for the Federal Telecommunications Commission’s four blocks of 10 MHz in each of Mexico’s nine wireless regions.


Amongst those bidding were America Movil SA unit Telcel, Spain’s Telefonica Moviles SA and Grupo Iusacell. Bids totaled 190.9 million pesos.


Also of note, U.S. administration official said that U.S. citizens will  need passports to re-enter the U.S. from Mexico, Canada, Panama and Bermuda by 2008. The move is part of the U.S.’s plan to strengthen border controls.


Argentine receipts bucked the broader market trend and moved higher on the session. In economic reports, consumer prices jumped 9.1% in March from a year ago, up from 8.1% in February.


On a sequential basis, consumer prices rose 1.5% in March, after advancing 1% in February. The central bank currently targets inflation of 5% to 8% for 2005.


In Chile, consumer prices advanced 0.6% in March from the prior month. March’s increase was the first seen in four months. Some traders noted that Chile’s central bank could raise its lending rate again this week in order to curb inflation.


Thomson Financial Corporate Group
www.thomsonfinancial.com


PRNewswire

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