Brazil and Latin America moved lower on the session, as investors focused more on domestic reports and less on U.S. market movement. Brazilian shares declined on inflation concerns, while Mexico felt pressure from wireless provider America Movil.
Argentine shares receded, as investors continue to await the outcome of a U.S. court ruling regarding the country’s debt restructuring.
Brazil’s benchmark Bovespa Index fell 124.45 points, or 0.49%, while Mexico’s benchmark Bolsa Index declined 52.81 points, or 0.42%. Argentina’s Merval Index tumbled 22.52 points, or 1.58%.
Brazilian issues slipped, as concerns over higher domestic inflation and continued interest rate hikes overshadowed upbeat corporate reports.
According to a weekly central bank survey of economists and analysts, expectations for Brazil’s benchmark IPCA inflation index rose to 6.30% for the end of April from the prior 6.28% forecast. The reading for the IPCA rate for the month of April will be released on Wednesday.
Turning to corporate earnings reports, Banco Bradesco, Brazil’s largest private bank, said that expanding consumer credit helped to nearly double its first-quarter profits to 1.205 billion reais from 609 million reais in the corresponding period a year ago.
The bank’s total credit portfolio grew to 66 billion reais, a 20% increase from the year-ago period.
Within the airline group, no-frills airline Gol moved to second place in the Brazilian market, with 27.8% of market share in April. The firm nudged past Varig, which logged 27.6% in the month. Gol’s market share increased from 26% in March and 20% in April 2004.
Separately, Varig said that the firm appointed a new board of directors and chief executive. Henrique Neves was appointed chief executive, while David Zylbersztajn was named chairman.
Mexican shares were mostly lower on the session, partly due to a decline in America Movil. On the political front, Mexico City Mayor Andres Manuel Lopez Obrador said that he will resign on July 31 to run for president.
Last week, the Mexican government dropped its land dispute case against the mayor, which had threatened to bar him from running in the 2006 presidential race.
American Movil was active on a batch of news items. A major investment bank raised its price target on the firm to US$ 64 from US$ 60 and raised its earnings estimates due to higher subscriber growth and less-than-expected margin deterioration.
Separately, the wireless telecommunications firm said that it is not planning to bid for Spain’s Grupo Auna, but does intend to bid for wireless spectrum in that company. Also, Hutchison Telecom said that it will sell its mobile operations in Paraguay to America Movil for an undisclosed amount.
In economic reports, higher food prices led to a stronger-than-expected 0.36% advance in Mexico’s Consumer Price Index for April, according to the Bank of Mexico. The rise boosted annual inflation to 4.6% from 4.39% at March’s end.
Elsewhere, Argentina’s Techint confirmed that it made a formal offer to buy Mexican steelmaker Hylsamex, which is owned by conglomerate Alfa SA. Details surrounding the offer were not disclosed.
Separately, a major brokerage firm said that there remain several barriers to selling Hylsamex, including falling steel prices and the firm’s high valuation relative to its pool of buyers. The broker cut Hylsamex’s earnings estimates and price target.
Argentine issues followed the broader Latin American markets lower. Investors continue to await a ruling from a U.S. appeals court regarding US$7 billion in frozen defaulted bonds.
In corporate earnings reports, oil and gas firm Petrobras Energia posted a jump in its first-quarter net profit to 122 million pesos from 82 million pesos a year earlier, thanks to higher oil prices and wider margins in refining.
Thomson Financial Corporate Group