Mass Killings by Drug Gang Don’t Worry Brazilian Investors

Latin American stocks tumbled as investors continued to take profits amid worries about rising global inflation and U.S. interest rates. Brazilian shares were further pressured by some lackluster earnings news from local corporate giants.

Brazil’s Bovespa Index dropped 940.52 points, or 2.34%. Mexico’s benchmark Bolsa Index fell 432.77 points, or 2.05%, while Argentina’s Merval Index lost 54.93 points, or 3.04%.

Brazilian stocks sank, as investors digested a mixed batch of local earnings reports and continued to fret over the outlook for U.S. interest rates.

Attacks by a drug gang that left 91 dead, half of them policemen, didn’t seem to have contributed to the market downturn. Fear of new attacks, however, shortened the period the Bovespa, the São Paulo stock market, kept open, this Monday, May 15.

On the earnings front, aircraft maker Embraer said late Friday, May 12, that its first-quarter net profit plunged to 86.9 million reais from 233.8 million reais a year earlier, missing expectations. Results were hurt by an appreciation of the real and a drop in deliveries.

Meanwhile, oil giant Petrobras late Friday said its first-quarter net profit rose 33% from a year ago to 6.68 billion reais but missed analyst estimates. Results were hurt in part by higher taxes.

Banco do Brasil SA posted a record first quarter net profit of 2.343 billion reais, up sharply from 965 million reais a year ago and above market forecasts. Results benefited from growth in the bank’s client base.

Elsewhere, Mexican shares dropped for a fourth straight session on continued profit taking amid worries that U.S. interest rates will rise higher than initially expected.

Before the recent bout of profit taking Mexico’s bolsa had risen strongly on optimism about local economic and earnings growth. In a sign the economy remains on solid footing, the Finance Ministry reported today that Mexico’s industrial production surged 9.7% in March from a year earlier.

Argentine issues followed the region’s descent into the red amid profit taking and concerns about rising U.S. interest rates and global inflation.

On an up note, a major investment bank upgraded Argentina to "outperform" from "marketperform." "We have been surprised at the staying power of Argentina’s recovery, and believe that the economy still has significant impetus, as long as commodity prices remain high," the bank said.

Thomson Financial – www.thomsonfinancial.com

Tags:

Ads

You May Also Like

For the First Time European Outnumber Latin American Tourists in Brazil

The number of European tourists who came to Brazil in 2004 was greater than ...

Brazilian Stocks Down on US Interest Rates Concerns

Latin American shares collectively declined alongside a depressed U.S. market. Brazilian shares ultimately soured, ...

With 18 Million Over 60, Brazil Is No Longer the Land of the Youth

The 17.6 million inhabitants over 60 ranks Brazil eighth worldwide in senior-citizen population the ...

Brazil Lula’s Top Advisor Knew of Vote Buying, Says Head of Labor Party

Private and government companies helped financed the “vote buying” in the Brazilian Congress revealed ...

Real(ity) Check

After three years of success with inflation brought to its lowest level in 40 ...

Bush in Brazil: ‘Lula Gave Us an Unbelievably Good Barbecue’

Thank you. Boa tarde. Thank you for coming. This is my first trip to ...

Brazil’s Dilemma: Moratorium or Euthanasia

Once in a while, certain important questions, some even transcendental ones, emerge from dealing ...

Brazilian Copper Sector Brings the Country Close to US$ 5 Billion

Revenues of the Brazilian copper industry have risen threefold since 2003. The figures were ...

Second in Line of Presidential Succession in Brazil Guilty of Extortion

The owner of the Fiorella, a restaurant and snack bar chain, Sebastião Augusto Buani, ...

Embraer 190 E-Jet manufactured by Brazil's Embraer

Swiss M1 Travel Gets 5 Maybe 10 Brazil’s Embraer 190 E-Jets

Brazilian aircraft manufacturer Embraer and Switzerland-based M1 Travel Ltd. have just announced a contract ...