Brazilian and Latin American receipts spent another day in the red, partly on regional concerns, but also due to U.S. market weakness. A disappointing earnings report from Wal-Mart Stores outweighed a robust retail sales reading in the U.S.
Meanwhile, Brazil’s market tumbled, as investigations were launched against two key Brazilian officials. Also, Mexican shares turned lower late in the session following a disappointing economic report. Argentina also posted declines.
Brazil’s benchmark Bovespa Index plunged 581.39 points, or 2.35%, while Mexico’s benchmark Bolsa Index edged down 16.11 points, or 0.13%. Argentina’s Merval Index receded 10.66 points, or 0.76%.
Brazilian shares led Latin America lower, pressured by commodities titan CVRD’s earnings results and on foreign fund selling.
Also, Brazil’s Supreme Court said that it will investigate Henrique Meirelles, the president of the central bank, for alleged tax and foreign exchange irregularities.
Social Welfare Minister Romero Juca is also being investigated for alleged banking violations.
Amid a batch of economic reports, the Brazilian General Price Index showed deflation of 0.03% in the first 10 days of May, compared to inflation of 0.67% during the corresponding period in April. Economists were looking for a small rate of inflation in the latest reading.
Separately, the IBGE statistics institute said that retail sales volume jumped 8.61% in March from a year earlier. IBGE said that increased shopping during the Easter holiday, which arrived earlier in March instead of April, boosted results.
Topping corporate earnings reports, CVRD, the world’s largest iron ore miner, posted first-quarter results that landed at the low end of analyst expectations.
CVRD said that seasonal rains hindered operations. The firm posted a net profit of US$ 698 million, net revenues of US$ 2.21 billion and EBITDA of US$ 993 million.
Within the financial sector, Unibanco, Brazil’s third-largest private bank, said that its first-quarter net profit leapt to 401 million reais from 276 million reais in the corresponding quarter a year ago.
Operating profit surged to 711 million reais, from 471 million reais last year, while financial services revenue rose to 1.434 billion reais from 1.176 billion reais.
Turning to oil reports, the Federation of Petroleum Workers, which represent workers at Petrobras, accepted a profit-sharing proposal offered by the state-run oil firm. The move could also prevent a strike. Meanwhile, investors are awaiting first-quarter results from Petrobras, due out tomorrow.
Mexican shares had posted gains for much of the session, but ultimately felt pressure from the U.S. and a disappointing domestic economic report.
Mexico’s industrial production declined 4.7% in March from a year ago, as businesses were closed for the Easter holidays. Economists were looking for a rise in March production.
Robust retail sales data from the U.S., a key trading partner for Mexico, likely improved sentiment in the country earlier in the session. Retail sales rose 1.4% in April, following an upwardly revised 0.4% gain the prior month.
Ex-autos, sales advanced 1.1%, after edging up an upwardly revised 0.2% in March. Economists had expected sales and sales ex-autos to climb 0.8% and 0.5%, respectively. Also, the Bank of Mexico is expected to keep monetary policy steady tomorrow in light of a recent steady core inflation reading.
Meanwhile, Argentina continued its recent trend of losses. Argentina’s ambassador to the U.S. said that the country is looking to work with the International Monetary Fund, but that it will not begin discussions with holdout bond holders from Argentina’s debt restructuring until after the debt swap takes place.
In corporate reports, Spanish-Argentine oil firm Repsol said that robust oil prices and refining margins helped boost its first-quarter net profit 37% to 845 million euros from 618 million euros in the corresponding period a year ago.
Thomson Financial Corporate Group