Brazilian and Latin America slumped on the day, following U.S. markets into the red. The U.S. Dow Industrials posted triple-digit losses, partly due to speculation that select hedge funds may be in trouble following recent ratings downgrades for General Motors and Ford Motor.
Also, crude oil prices ultimately declined, after previously reaching intra-day highs of more than US$ 53 a barrel. Brazilian shares took a sharp dive ahead of tomorrow’s CPI reading and as foreign funds moved out of the country. Mexican and Argentine stocks also receded.
Brazil’s benchmark Bovespa Index plunged 702.04 points, or 2.76%, while Mexico’s benchmark Bolsa Index negated 65.59 points, or 0.52%. Argentina’s Merval Index slumped 25.51 points, or 1.81%.
Brazilian stocks continued to weaken ahead of tomorrow’s release of April’s Broad Consumer Price Index. Investors are anxious that inflation advanced last month, which could lead to continued interest rate tightening. The next central bank meeting for reviewing interest rate levels is set for May 17 and 18.
On the corporate front, no-frills airline Gol posted a higher first-quarter net profit of 131.1 million pesos from 90.7 million reais in the year-earlier period. The latest quarter’s results were boosted by new aircraft that transported more passengers.
Net revenue climbed to 589.2 million reais from 433.1 million reais. Also, earnings before interest, taxes, depreciation, amortization and aircraft rent expense advanced to 235.9 million reais from 187.5 million reais.
Meanwhile, Brazilian oil firm Ipiranga Petróleo denied that it was in talks with Venezuela’s PdVSA, in which that firm potentially would buy Ipiranga. The news follows an earlier report from a Brazilian newspaper claiming a deal was in the works.
Also, flat-steel producer CSN announced that it intends to purchase steel companies in the European Union and in the U.S. The firm’s managing director for investments, Lauro Henrique Campos Rezende, commented, “We are talking to a lot of people.” Rezende also said the firm is looking for a stock-for-stock acquisition, as opposed to an all-cash deal.
Mexican shares followed U.S. markets lower, but posted smaller losses than their Brazilian and Argentine counterparts. Homex was a positive standout, after certain analysts were bullish on the home building sector due to possible double-digit growth this year in the industry.
Mexican broadcaster Grupo Televisa SA’s chairman and president, Emilio Azcarraga, resigned his position as vice chairman of U.S.-based Univision Communications. Televisa declined to comment on the news.
A U.S. Securities and Exchange Commission filing by Univision also revealed that Televisa’s executive vice president, Alfonso de Angoitia, resigned from the board.
Separately, Univision disclosed that Televisa filed a lawsuit against the firm on allegations it breached a program license agreement with Televisa. As part of the lawsuit, Televisa alleges Univision did not pay royalties attributable to revenues from one of Televisa’s programs.
Argentine issues continued to fall, as investors await a U.S. court ruling related to the country’s debt restructuring. Some investors hope a decision may be rendered as early as this week. Market watchers are also awaiting earnings results from the heavily-weighted financial sector.
Thomson Financial Corporate Group
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