Latin American shares were mixed on the session, as U.S. stocks firmed somewhat. Brazilian issues returned earlier gains and edged lower as the country’s political concerns continue to shadow trading.
Meanwhile, Mexican equities advanced on some positive economic news.
Investors await Wednesday’s monetary policy meeting in Brazil, which could have the central bank holding rates. Also, some key U.S. economic reports are due out this week, including retail sales data and the consumer price index.
Brazil’s benchmark Bovespa Index ebbed 49.12 points, or 0.20%, while Mexico’s benchmark Bolsa Index rose 84.99 points, or 0.64%. Argentina’s Merval Index tumbled 14.05 points, or 0.98%.
Brazilian issues reversed their positive course and turned lower, as political concerns continue to preoccupy investors.
Traders are hoping the Brazilian Central Bank will end its interest rate tightening cycle at this Wednesday’s monetary policy meeting.
Separately, in the central bank’s weekly survey of economists, expectations for 2005 gross domestic product growth fell to 3.12% from last week’s 3.27% growth outlook.
Meanwhile, inflation expectations for the year shrank to 6.21% from 6.32% a week earlier. The survey also showed that analysts do not expect the central bank to raise the Selic base interest rate this week.
Turning to politics, President Luiz Inácio Lula da Silva pledged a thorough investigation into his Workers’ Party bribery allegations.
Over the weekend, Congressman Roberto Jefferson, who initially raised the bribery concerns, said that reports last week that he had taped evidence to support his claims were false.
Jefferson also indicated that Presidential Chief of Staff José Dirceu accepted some of the bribes, a claim that Dirceu denies. Today, local Brazilian papers indicated that the administration of President Lula may replace Dirceu.
On the corporate front, U.S.-based J.C. Penney announced its intention to sell Brazilian retailer Lojas Renner for up to US$ 255 million. The move will allow J.C. Penney to concentrate more fully on its key U.S. market.
Mexican shares followed the U.S., its key trading partner, higher. Trading is expected to be light in the short term, which is typical for the summer. Investor interest is expected to pick up when corporations’ second-quarter financial results are released.
Turning to economic reports, the Finance Ministry said that April’s industrial output jumped 5.2% from a year earlier and climbed 0.02% from March.
Argentine issues receded amid low volume. Spanish-Argentine firm Repsol-YPF told Dow Jones Newswires that oil and gas production in Bolivia is returning to normal.
Last week, amid the resignation of former Bolivian President Carlos Mesa, protestors invaded certain Repsol oil fields demanding the nationalization of the oil and gas industry.
Thomson Financial Corporate Group – www.thomsonfinancial.com