Latin American equities gave up some of the gains earned yesterday, as Brazilian traders returned from a market holiday in a selling mood. Brazil led the markets lower, pressured by profit taking in the U.S. following yesterday’s rally.
A jump in oil prices also weighed on investor sentiment. Meanwhile, Mexican receipts were active on various corporate and economic reports.
Brazil’s benchmark Bovespa Index receded 295.38 points, or 1.18%, while Mexico’s benchmark Bolsa Index fell 68.30 points, or 0.57%. Argentina’s Merval Index slipped 0.05 points, or 0.00%.
Brazilian issues succumbed to weakness, after posting an initial advance as traders caught up to a stunning advance in U.S. markets yesterday upon returning from a national holiday. After Wednesday’s close, the central bank raised the base Selic rate to 19.50%, marking the eighth-straight month of hikes.
Mexican shares were hit with mild selling pressure, as investors returned some of the impressive gains logged yesterday. Corporate and economic reports dominated headlines.
The Bank of Mexico left monetary policy unchanged, keeping its money market liquidity restriction, or corto, at 79 million pesos daily. The central bank has raised the corto 12 times in a little more than a year. The move mostly surprised economists, who were looking for the tightening cycle to continue.
Separately, the Consumer Price Index rose 0.08% in the first two weeks of April, compared to an unchanged reading in the corresponding period a year ago, but still landed below analyst expectations. April’s report nudged annual inflation toward 4.5% from about 4.4% at March’s end.
In corporate news, cement titan Cemex SA said that its purchase of RMC helped boost its first-quarter results. The firm’s sales jumped 43% to US$ 2.6 billion from the corresponding period a year ago.
The firm’s net profit advanced to US$ 444 million on strong consolidated operating performance and gains from their derivative positions. EBITDA was up 14% to US$ 633 million, while excluding RMC, EBITDA rose 5% to US$ 583 million. Looking ahead, for 2005, EBITDA is expected reach US$ 3.5 billion.
Elsewhere, homebuilder Homex reached an agreement to purchase Casas Beta for approximately US$ 194 million. Homex said the acquisition will make it the sector leader in number of units sold, among other measures.
Homex also posted a higher first-quarter net profit of 170.2 million pesos from 122.6 million pesos a year earlier. Operating profit advanced to 290.8 million pesos from 216.3 million pesos, while sales totaled 1.29 billion pesos, up from 974.2 million pesos a year ago.
Turning to research, a major brokerage initiated coverage on wireless services provider America Movil with a “buy” rating.
Argentine issues finished little changed, amid a dearth of corporate or economic reports. Investors are awaiting this coming Wednesday’s U.S. hearing on US$ 7 billion worth of bonds related to the nation’s massive debt restructuring.
Elsewhere, Southern Peru Copper said that strong metal prices led to it more than doubling its first-quarter earnings. Sales surged to US$ 486.2 million from US$ 274.1 million in the corresponding period a year ago.
Thomson Financial Corporate Group
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