Brazil Stocks Fall. Blame It on China!

Brazil stocks declined this Thursday, following word that China hiked interest rates. The People’s Bank of China raised its one-year lending rate to 5.58% from 5.31%, while the one-year deposit rate was boosted to 2.25% from 1.98%.

This was the government in action trying to cool the nation’s growth and inflation. Some Brazilian investors worry that moderating growth in China will result in less demand for base metals and other commodities.


Brazil’s benchmark Bovespa Index fell 242.28 points, or 1.05%. Brazilian issues fell, as China’s rate hike stoked fears that the country could reduce imports from emerging markets.


Analysts explained that Brazil’s economic growth, which has primarily been bolstered by robust exports, could weaken if China cuts purchases of raw materials like steel.


Shares of the world’s leading iron ore miner, CVRD, dragged on the news.


Additionally, the release of bearish central bank comments from last week’s monetary policy tightening added pressure.


Brazil’s central bank stated that recent rate hikes had failed to dampen financial markets’ inflation expectations, suggesting further sizable interest rate hikes may be forthcoming.


The bank indicated that it was concerned domestic fuel price increases lagged behind the spike in world oil prices, prompting steeper 2005 inflation estimates.


In response, some analysts raised their projections for the November Selic rate hike to 0.5 percentage points from 0.25 percentage points.


On the earnings front, Tele Norte Leste Participacoes reported a third- quarter net profit of 159.3 million reais, compared with a net loss of 23.6 million reais a year ago, aided by increased phone rates and greater revenue from its long-distance and wireless divisions.


Also, Brazil’s largest private bank, Banco Bradesco, posted net earnings that rose to 752 million reais in its third quarter from 564 million in the year-earlier period.


According to Thomson Financial Brasil, analysts had forecast earnings of 678 million reais, on average. The bank mainly cited the streamlining of operations and cost cutting efforts over the past year for the higher profits.


Amid deal items, Brazilian steelmaker Gerdau’s North American unit, Gerdau Ameristeel, publicized an agreement to purchase the assets of U.S. concrete reinforcing steel producers Gate City Steel and RJ Rebar for an undisclosed sum, in the subsidiary’s second acquisition in as many months.


Thomson Financial Corporate Group 
http://www.thomsonfinancial.com/
PRNewswire

Tags:

Ads

You May Also Like

World Corruption Index Downgrades Brazil to 70th Place

Brazil came in 70th place in the latest Corruption Perceptions Index (CPI) released Monday, ...

Can a Charismatic Evangelical Environmentalist Presidential Candidate Change Brazil Politics?

The airplane crash on 13 August 2014 that killed the Brazilian presidential candidate Eduardo ...

Carandiru Prison’s Massacre (111 Deaths) Mastermind Murdered in Brazil

The Brazilian colonel who headed a police operation that resulted in the  death in ...

Brazil Pleas for Haiti at UN

This week the Brazilian government is making another move to gain new support for ...

Brazil’s Petrobras Has Ambitious Plans for Oil Drilling in Angola

Brazilian state-owned oil company Petrobras plans to increase its participation in petroleum exploration in ...

Brazil Ambassador Deplores Lack of International Help to Haiti

“There has been a reduction in crime in certain spots where the population was ...

IMF Warns: Commodities Bonanza for Brazil and LatAm Is Over

Latin American economies are facing an awkward combination of slowing activity, more difficult external ...

Coming Arab Summit in Brazil Already Bearing Fruits

Brazilian and Arab diplomats are optimistic about the possible results of the summit between ...

Brazil’s Power Generator Company Already in 53 Countries

The Leon Heimer group, from the northeastern Brazilian state of Pernambuco, a producer of ...

Brazil Reaffirms It Will Give US$ 1 Million to Rebuild Lebanon

Celso Amorim, Brazil's Minister of Foreign Relations confirmed during the International Conference for Lebanon ...