Latin American equities jumped on the session, led by strong advances from Brazil and Mexico ahead of earnings news this week. Strength in U.S. markets, which were aided by upbeat economic data and deal news, also supported Latin America.
U.S. existing home sales rose at an annual pace of 6.89 million in March from February sales of 6.82 million, and compared with expectations for growth of 6.80 million.
Brazil’s benchmark Bovespa Index leapt 464.44 points, or 1.88%, while Mexico’s benchmark Bolsa Index rallied 381.78 points, or 3.18%. Argentina’s Merval Index advanced 14.14 points, or 1.04%.
Brazilian shares rallied, as domestic funds snapped up recently beleaguered shares. This Thursday, the central bank will release the minutes from its most recent interest rate meeting, in which the bank raised rates to 19.50% to the surprise of some economists.
Also, for the eighth-straight week, according to the central bank, economists upped their 2005 inflation forecasts. Meanwhile, an International Monetary Fund official commented that the region’s public sector debt remains high and could be a risk to its economy, according to Estado news agency.
In corporate headlines, aircraft manufacturer Embraer was active, after the firm announced orders for 15 Embraer-170 jets from Saudi Arabian Airlines. The deal is valued at approximately US$400 million.
Separately, a large investment bank issued some bullish research on rival Bombardier. The brokerage noted that with Northwest Airlines’ firm order for 15 CRJ200 regional jets, Bombardier’s backlog is looking better.
Brazil’s state-run oil company Petrobras was active on the session. A large brokerage lifted its forecast for the firm’s 2005 earnings per share alongside higher estimates for oil prices.
Mexican receipts surged on the session amid upbeat brokerage research and ahead of America Movil’s first-quarter results, which are due out after the close. Strong gains from the U.S., the nation’s key trading partner, also boosted shares.
On the political front, Mexico City Mayor Andres Manuel Lopez Obrador returned to work today, despite Congress’ recent decision to strip him of immunity from prosecution to face charges related to a land use dispute. Federal authorities warned that the mayor’s return to work is in violation of the law, and he could face further charges.
Turning to research news, a major investment bank upgraded Mexican equities to “overweight” from “equal-weight” within its model Latin American portfolio. The bank moved some allocation from Chile to Mexico, and noted that Mexico is “attractive enough to put some capital to work.”
Argentine issues moved higher, ahead of a key development in the region’s massive debt restructuring. The U.S. Court of Appeals is set to hold a hearing regarding frozen defaulted bonds that have postponed Argentina’s US$ 103 billion debt swap settlement.
Traders are unwilling to make any major moves until the situation is resolved, although a final ruling from the appeals court could still take several more weeks.
Thomson Financial Corporate Group
Web site: http://www.thomsonfinancial.com/