Latin American markets rallied, following weakness throughout the first three sessions of the week. Brazilian and Mexican shares were particularly strong.
Investors are closely monitoring the impending outcome of a key vote regarding the impeachment of Mexico City’s popular mayor. Argentine shares were little changed.
Brazil’s benchmark Bovespa Index rebounded 612.78 points, or 2.38%, while Mexico’s benchmark Bolsa Index rallied 300.14 points, or 2.47%. Argentina’s Merval Index edged up 0.17 points, or 0.01%.
Brazilian issues turned notably higher, following three consecutive days of losses. Crude oil prices posted significant declines, easing U.S. rate-tightening concerns, while supporting prospects for foreign investment in Brazil. Also, investors await inflation data due out tomorrow.
In corporate reports, Petrobras, Brazil’s state-owned oil firm, said that on Wednesday it exceeded 1.7 million barrels of crude for the first time. The firm’s oil output has increased at a rapid pace since it brought the P-43 and P-48 platforms online.
Phone companies, including heavily-weighted Telemar, were active, after the firms agreed to a 7.99% hike in prices for calls made from fixed-line phones to mobile phones, according to the local press.
Elsewhere, Aneel, Brazil’s electricity regulator, allowed four utilities, including Energética de Minas Gerais, to raise rates. Rates were increased to a level above analyst expectations, causing some concern that inflation could pick up. On the news, a major broker raised its price target on Cemig.
Mexican issues also turned substantially higher, following recent weakness amid political uncertainty. The full house of Congress is expected to vote in favor of stripping political immunity from Mexico City Mayor Andres Manuel Lopez Obrador after the market closes today.
The move would allow the popular mayor to face charges of ignoring a court order in a land-use dispute, which in turn would likely prevent him from running for president in 2006. Nevertheless, the mayor declared his intention to run for president next year.
Turning to economic reports, Mexico’s Consumer Price Index rose a slightly higher-than-expected 0.45% in March, following a 0.33% uptick in February.
The central bank cited higher fruit and vegetable prices for March’s advance. The annual inflation rate climbed to 4.39% from 4.27% at February’s end. Core inflation, excluding education, energy and fruit and vegetable costs, rose 0.31% last month.
Wal-Mart de Mexico SA, Latin America’s largest retailer, was active ahead of the release of its financial report, due out after the market’s close.
Industrial firm Alfa SA was in focus, after the firm’s chairman and chief executive said it was in discussions with six companies to sell Hylsamex SA, its steel unit.
Meanwhile, a major investment house raised its rating on brewing behemoth Grupo Modelo SA to “buy 2” from “neutral,” due to its surprisingly strong operating results during the past two quarters. The brokerage also raised its price target.
Argentine issues spent most of the session lower, but finished little changed. Investors continue to await a U.S. ruling, which is expected toward the end of April, regarding Argentina’s debt swap.
In related news on the legal front, Canada’s Bank of Nova Scotia is seeking more than US$ 600 million in damages from Argentina, claiming the government used “expropriatory and discriminatory actions” when the bank lost its investment in subsidiary Scotiabank Quilmes. Argentina’s debt default in 2001 led to the unit’s demise.
In the news, the Argentine unit of Royal Dutch/Shell Group reduced gasoline prices today in an attempt to offset losses after the firm’s price hike in March. Following the price increase, President Nestor Kirchner asked citizens to boycott the firm.
Thomson Financial Corporate Group
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