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

In Brazil, Left Gives a Show on How to Lose Power

With minds concentrated firmly on the race for the Oval office this weekend (though ...

Brazil, Colombia and Peru Agree to Look for Oil in Peru’s Amazon

Government oil corporations from Brazil, Colombia and Peru signed Thursday, November 22, an agreement in ...

Why Terror Won’t Bloom Here

Brazilians used the American tragedy to make fun of themselves. This is one of ...

Mean Streets

A new research shows profile of street children. Boys and girls are living on ...

Tunisia Whets Brazilian Entrepreneurs’ Appetite

The promotion of Brazil-Tunisia relations will proceed today in the city of São Paulo, ...

Brazil Spends Close to US$ 400,000 to Sacrifice 6,000 Sick Cattle

The government of Paraná, a state in southern Brazil, authorized the disbursement of US$ ...

EU Invests in Program to Export Brazil’s Lesser Known Fruits

Ricardo Elesbão Alves, a researcher in the EMBRAPA (Brazilian Agricultural Research Company) Tropical Agroindustry ...

85% of Schools for Indians in Brazil Don’t Go Over 4th Grade

Brazil’s  indigenous population will get around 400 new schools, according to information from the ...

Curitiba: The Real and the Fairy Tale

Curitiba has enjoyed an international reputation as Brazil’s point city for the twenty-first century. ...

Tambaba beach, in Paraíba, in the Brazilian Northeast

Joggers, Gourmands, Nudists, Everyone Is Welcome in João Pessoa, Brazil

João Pessoa is a city of about 600,000 people in the Northeast Brazilian state ...