US Investors Flee Rita to the Promising Shores of Brazil

Latin American markets ended in positive territory, with Brazil leaping forward on pleasing economic data. Mild bargain-hunting after Tuesday’s losses also helped. Wednesday’s gains were also attributed to foreign inflows, amid declines in U.S. markets.

Brazil’s benchmark Bovespa Index jumped 778.30 points, or 2.59%, while Mexico’s benchmark Bolsa Index climbed 170.94 points, or 1.10%. Argentina’s Merval Index added 14.76 points, or 0.90%.


Brazilian shares rallied on upbeat sentiment about the economy, and as foreign investors continued to channel funds in the region, amid weakness in North American shares. High oil prices due to Hurricane Rita and worries about the impact of the hurricane wave on the economy plagued U.S. markets again yesterday.


In domestic data, Brazil posted a current account surplus of US$ 822 million in August, below the US$ 1.75 billion registered a year ago, but still signaling strength in the economy.


Also, investors shrugged off mixed news on the political front. A poll showed that President Lula’s approval rating fell to 44% in September from 56% in June. Also, the lower House speaker resigned amid corruption charges.


In company action, Petrobras was in the spotlight, thanks to surging oil prices and after the company stated Tuesday it had found gas reservoirs of high quality off the U.S. Gulf coast. Also, Petrobras and electricity company Eletrobrás inked a deal to cooperate in studies and projects for electric energy generation.


In research, an investment bank noted that CVRD will be one of the primary beneficiaries of continued strong iron ore prices through 2010.


However, an investment bank downgraded steelmaker CSN to “neutral” from “buy” due to limited upside to a new price target.


Elsewhere, a local court reported receiving a formal proposal from a businessman interested in taking a controlling stake in struggling airline Varig, according to news services.


Mexican issues, meanwhile, rose as well, hitting new records. In today’s data, July retail sales jumped 3.3% from a year ago, or 0.8% from the prior month, the 31st consecutive monthly increase for the indicator.


Also, in corporate moves, Walmex rebounded from yesterday’s weakness caused by news that U.S. parent Wal-Mart had agreed to buy a third of Central American Retail Holding from Holland’s Royal Ahold NV for an undisclosed amount and is seeking a controlling interest in the company.


Argentine stocks advanced, in line with regional counterparts. Of note, gross domestic product grew 0.7% in July from June, or 7.8% from the prior year, lower than expectations for 8% growth, but still demonstrating robust expansion.


Thomson Financial Corporate Group – www.thomsonfinancial.com

Tags:

You May Also Like

Deteriorating Economy Leads Brazil to Cut Interest Rates by 1%

In a surprise move, Brazil's Central Bank (BC) decided today to cut by a ...

Brazilian Arrested in US Faces 5 Years in Jail for Selling Pornography

Brazilian Danilo Simões Croce, 42, of São Paulo, was arrested in Orlando, Florida. yesterday, ...

Brazil’s Isolated Amazon Indians Are a Link to the Past and a Life Lesson

What is it about the recent photographs of the “uncontacted” indigenous tribe of the ...

Furniture Makers from Brazilian Amazon Can’t Avoid Ecological Concern Anymore

Brazilian furniture producers from the Rolim de Moura Furniture Producer Association, in Rondônia, in ...

Brazil: Lula Should Know He’s Not a Czar

The government of Brazil erred in speaking against the report in The New York ...

Brazil Ends Tariff on Imported Ethanol Drawing Applause from Sugarcane Industry

Reacting to the Brazilian government’s announcement that it has unilaterally eliminated its tariff on ...

Bring the Brains Back

The strength of the real, and lower tariffs among other things, are making Brazil ...

Service Fees Make Brazil Banks Incredibly Profitable

For decades the growth of the Brazilian banking sector has continued uninterruptedly, preserved even ...

Crash Course

My wife assures me that there are rules, but I just don’t understand them ...

Chile and Uruguay Ban Beef and Pork from Brazil

Uruguay and Chile banned the import of beef and pork from Brazil following the ...