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Brazil’s Surplus Down Sharply Due to Declining Trade

Brazilian market kept retreating this Friday, May 19, amid continued concerns about rising global inflation and uncertainty over when the U.S. Federal Reserve will end its tightening cycle.

Brazil’s Bovespa Index dropped 74.29 points, or 0.20%. Mexico’s benchmark Bolsa Index fell 34.88 points, or 0.17%, while Argentina’s Merval Index inched up 1.49 points, or 0.09%.

Brazilian stocks dipped, extending recent losses, on continued concerns about U.S. inflation and interest rates following yesterday’s data showing a bigger-than-expected rise in U.S. consumer prices in April.

Investors fear that recent signs of inflationary pressure will lead the U.S. Federal Reserve to continue its tightening cycle longer than expected, potentially diverting investment flows away from emerging markets like Brazil.

In local economic news, Brazil posted a current account surplus in April of US$ 241 million, down sharply from US$ 1.35 billion in March, due in part to a declining trade surplus and significant overseas corporate profit remittances.

On the corporate front, steelmaker Arcelor Brasil was in focus after Mittal Steel raised its offer for Arcelor Brasil parent Arcelor by 34% and increased the cash element of the bid as well.

Meanwhile, brewing giant Companhia de Bebidas das Americas (AmBev) posted a first-quarter net profit that more than quadrupled to 655.9 million reais from a year earlier amid higher revenue.

Elsewhere, Mexican shares slumped, as investors continued to fret over the outlook for U.S. inflation and interest rates. In corporate news, the A shares of retailer Grupo Famsa SA debuted on the Mexican Stock Exchange today.

The shares rose 1.9% to 26.50 pesos after the initial public offering priced earlier in the day at 26.00 pesos. Some 2.56 billion pesos worth of shares were sold through the IPO and secondary offering. Famsa expects to receive about 1.51 billion pesos in net proceeds from its initial listing.

Argentine issues were little changed amid a dearth of local market news.

Thomson Financial www.thomsonfinancial.com

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