Inflation Up and Market Too in Brazil

Latin American markets were mixed Monday, December 12, as Brazil moved upward, and Argentina fell. Mexican markets were closed for a holiday.

Meanwhile, U.S. markets were little changed, as investors await today’s U.S. Federal Reserve meeting on interest rates in which investors are hoping for some indication as to when the Fed will end its rate-tightening cycle.

Brazil’s benchmark Bovespa Index edged up 48.84 points, or 0.15%, while Argentina’s Merval Index receded 13.39 points, or 0.87%.

Brazilian issues edged higher, as investors believe the central bank may accelerate the pace of interest-rate cuts locally. The decision is set for Wednesday.

Meanwhile, São Paulo’s Fipe research institute announced that the consumer price index rose 0.18% in the four-week period ending December 7, compared to a 0.29% jump in November.

Separately, the General Price Index, or IGP-M, was 0.06% higher in the first 10 days of December, a slowdown from the 0.16% advance in the first 10 days of November.

On the corporate front, state-run oil firm Petrobras signed a contract with a consortium of firms regarding the construction of the processing unit of its new P-53 platform. Total investments for the project are estimated to be approximately US$ 950 million.

Meanwhile, Brasil Telecom filed a complaint with CVM against Banco Opportunity and all of its subsidiaries and directors regarding alleged improper management of the company.

Steelmaker Usiminas announced its intention to invest US$ 1.5 billion to improve its product mix. The firm is also studying the construction of a US$ 3 billion steelworks.

Despite closed Mexican markets, economic reports were still released. The Finance Ministry announced that industrial output rose 2.6% in October on the year, while advancing 0.66% from September on a seasonally adjusted basis. Meanwhile, manufacturing output advanced 2.7% in October from a year ago.

Meanwhile, Mexican Finance Minister Francisco Gil Diaz said that economic growth in the country was expected to be 3% by year end.

In research news, a major investment bank upgraded retailer Soriana to "overweight" from "equal weight," due to the firm’s attractive valuation.

Argentina moved lower on the session, amid a dearth of economic or corporate news items. Meanwhile, concerns over the country’s inflation level persist.

Thomson Financial – www.thomsonfinancial.com

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