Latin American shares rallied on the session, bolstered by strength in the U.S. markets and on the Fed’s indication that U.S. inflation is “contained.” Brazil led markets higher on a batch of positive corporate reports.
Mexican shares were also solidly in the black, as a land dispute case was dropped against the popular Mexico City mayor. Argentine issues jumped, aided by a report showing weaker inflation levels in April.
Brazil’s benchmark Bovespa Index rallied 758.84 points, or 3.07%, while Mexico’s benchmark Bolsa Index surged 285.16 points, or 2.31%. Argentina’s Merval Index leapt 37.74 points, or 2.69%.
Brazilian shares rallied, as investors continued to cheer the U.S. FOMC’s commitment to a “moderate,” not steep, rise in rates, which should not unduly pressure Brazil’s Central Bank to hike rates.
The Fed’s indication that inflation was contained also eased concerns in Latin America.
Domestic corporate reports continued to boost market sentiment. Still, according to São Paulo’s Fipe research institute, the consumer price index rose 0.83% in April from 0.79% in March, partly due to rising food prices.
French supermarket retailer Casino Guichard-Perrachon & Cie announced that it will raise its stake in Brazil’s CBD to 34.3% from 27.4%.
Separately, CBD posted a first-quarter net profit of 57.7 million reais, compared with 27.9 million reais in the corresponding period a year earlier. Gross revenues climbed to 9.94 billion reais from 3.41 billion reais.
Last night, mining titan CVRD said that it will invest US$ 20.3 million in the building of a sinter plant in Pará. Elsewhere, Petrobras announced that the Nigerian National Petroleum Corporation authorized it and France’s Total to develop its offshore oil field.
Turning to airline stocks, Embraer said that it will invest US$ 235 million to expand its business jet portfolio to include light and very light jets.
Meanwhile, Portugal’s TAP Air Portugal made an offer to buy a stake in Brazil’s Varig. An official at Varig said the offer was made two weeks ago, and that it was one of several offers made to the firm.
Meanwhile, petrochemicals firm Braskem said that its first-quarter net profit surged to 206 million reais from 10 million reais, bolstered by export revenue.
Net revenue advanced to 3.38 billion reais from 2.39 billion reais. Braskem reached a capacity utilization rate of more than 90% in all of its production units, and aims to operate at full capacity throughout the year.
Mexican issues also bounded higher on U.S. market strength. Also, Mexico’s federal attorney general’s office said it was dropping its land dispute case against Mexico City Mayor, Andres Manuel Lopez Obrador, which will allow him to run for president in 2006.
Beverage group Femsa said that shareholders of record on May 10 will be eligible to participate in a secondary share offering. The firm intends to offer stock representing 50% of its series BD shares currently in circulation.
Also, wireless phone company America Movil surged, after the firm met with various analysts. One major brokerage commented that the meetings “reinforced our bullish opinion of the stock.”
Argentina continued its winning streak today, encouraged by cooling inflationary indicators. INDEC, the national statistics agency, said that the consumer price index rose 0.5% in April from March, and was up 8.8% on the year.
The most recent result follows a 1.5% jump in March, which had lifted the year-on-year rate to 9.1%. Economists expected a higher 0.8% rise in April.
Thomson Financial Corporate Group