Brazilian stocks fell, yesterday, alongside lackluster trading in the U.S. Brazilian equities suffered as ongoing high oil prices spurred inflationary fears.Brazil’s benchmark Bovespa Index shed 132.87 points, or 0.58%.
Brazilian issues fell, as high world oil prices ignited fears of greater inflation. Steep oil prices are expected to increase inflation, possibly leading the country, which is a net oil importer, to boost interest rates.
Some analysts foresee the government increasing local fuel prices for the third time this year following October’s municipal elections.
In a central bank survey released yesterday, economists hiked their projections for 2005 IPCA consumer price inflation to 5.89% from 5.81% the prior week.
Additionally, economists lowered their 2005 economic growth estimates to 3.5% from 3.6%, but increased their 2004 outlook to 4.56% from 4.53% following the release two weeks ago of data showing industrial production surged 13.1% in August.
Looking ahead, on Thursday, Brazil’s central bank will release the minutes from last week’s monthly monetary policy meeting, where the bank raised its benchmark Selic rate by a greater-than-expected half percentage point to 16.75%.
Investors will be paying attention to the wording of those comments in order to determine how aggressive future monetary policy will be.
In economic news, Brazil’s trade surplus reached US$ 650 million in the fourth week of October, lifting its year-to-date surplus to US$ 27.476 billion.
Brazil has already exceeded its record-breaking 2003 trade surplus of US$ 24.8 billion, with analysts attributing the incredible performance to a competitive currency, a broad industrial recovery in Brazil and a stronger global economy.
Thomson Financial Corporate Group
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