• Categories
  • Archives

Higher Interests in US Lower Brazilian Shares

Latin American markets returned early gains, following U.S. markets lower, after a U.S. Federal Reserve statement signaled no near-term end to its rate-tightening cycle.

As expected, the U.S. Federal Open Market Committee lifted interest rates. Higher U.S. rates can detract investors from emerging markets. Brazilian, Mexican and Argentine shares all posted declines.


Brazil’s benchmark Bovespa Index declined 75.15 points, or 0.30%, while Mexico’s benchmark Bolsa Index negated 64.01 points, or 0.47%. Argentina’s Merval Index fell 7.14 points, or 0.52%.


Brazilian issues reversed their earlier positive course and turned lower following the U.S. FOMC statement. Both domestic and U.S. economic data was in focus today, as well as the re-emergence of local political strife.


As expected, the U.S. Federal Open Market Committee lifted interest rates by another 25 basis points to 3.25%. The Federal Reserve also said that current rates remain “accommodative,” and it kept the “measured pace” language when referring to future rate hikes.


Closer to home, Brazil’s central bank raised its inflation forecast for 2005 to 5.8% from 5.5%, but lowered its 2006 target to 3.7% from 3.8%. Pressures from higher fuel prices and public utility rates caused the hike in the 2005 forecast.


The central bank also reduced its 2005 gross domestic product growth forecast to 3.4% from its prior 4.0% target. Brazilian Central Bank President Henrique Meirelles said that this year’s economic growth is not very strong and will not repeat its robust 2004 performance.


On the political front, Congressman Roberto Jefferson said in an interview with daily newspaper Folha de S. Paulo that high-ranking executives at electric power utility Furnas Centrais Elétricas were involved in the current political bribery schemes. As a result of the accusations, federal prosecutors said they would investigate the matter.


Turning to corporate reports, Aneel, Brazil’s electric power regulator, endorsed a 2.25% average annual price adjustment for Electropaulo. That firm rallied in response.


Mexican receipts also receded, alongside U.S. market declines. The National Statistics Institute, or Inegi, reported that mining production declined 3.8% in April compared to a year earlier, led by receding silver and copper production.


Conglomerate Desc sold its automotive lifters firm Moretsana SA to U.S.-based Eaton Corp. for US $8 million. The Mexican firm intends to use the sale’s proceeds to invest in fixed assets and other businesses.


Meanwhile, satellite operator SatMex filed for bankruptcy under Mexican law. The firm said the filing is “a necessary step in the negotiations to restructure SatMex’s debt obligations. In May, certain creditors filed an involuntary bankruptcy lawsuit in New York against the firm.


Argentine issues declined further today, following a steep sell-off during yesterday’s session after the government announced additional capital controls.


In economic reports, the National Statistics Institute, or Indec, said that May’s trade surplus reached US $1.188 billion, down from US $1.6 billion a year ago. Higher imports contributed to the narrower trade gap.


Thomson Financial Corporate Group – www.thomsonfinancial.com

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Brazilian State Companies Invest US$ 14.5 Billion, a 6% Growth

Brazil's state-owned or controlled companies were sailing on calm waters in the first eight ...

In Brazil, Torture Is Still Favorite Interrogation Method

The Constitution of Brazil declares that the government of this country cannot punish individuals ...

Brazil Wants to Convert Foreign Debt into Education Funds

In July, at a meeting in Spain, Brazil plans to present a proposal to ...

20% of the 48,000 Brazilians Murdered Every Year Are Killed by the Police

The police of Brazil are responsible for a significant proportion of the 48,000 murders ...

It’s Official: Brazil Won’t Renew IMF Accord

Brazil’s Minister of Finance, Antônio Palocci, informed the International Monetary Fund (IMF) that Brazil ...

So Vain

Why does President Cardoso want Brazil as a permanent member of the UN Security ...

US Fed Decision Hurts Brazilian Markets

Brazilian and Latin American stocks tumbled, dragged down by concerns that higher U.S. interest ...

Overcrowding and Lack of Maintenance Leave 5 Dead in Rio’s Charming Trolley Car

The Santa Teresa trolley car, one of Rio de Janeiro’s postcard attractions, had an ...