Brazilian Stocks Follow US into Black Territory

Brazilian shares were higher today, ending a gloomy string of sell offs prompted by ongoing concerns about the U.S. interest-rate-hiking cycle and the prospects for inflation. Meanwhile, U.S. inflation data showed an increase in consumer prices.

Brazil’s Bovespa Index rose 93.85 points, or 0.29%. Mexico’ benchmark Bolsa Index rebounded 148.95 points, or 0.89%, while Argentina’s Merval Index was up 12.4 points, or 0.83%.

Brazilian shares managed to track the U.S. into the black today, with state oil company Petrobras rising on international oil prices. Issues managed to move back into the black, after shares dipped earlier on cautionary comments from U.S. Federal Reserve officials.

Shares in Brazilian online retailer Submarino SA soared, after the company announced its intention to buy back some of its own shares.

Elsewhere, Mexican shares also rose, ending a seven-session losing streak sparked by the recent flight from emerging-market assets continued. There was some concern earlier in the session, following a U.S. economic report that showed consumer inflation rose on surging gasoline prices.

The consumer price index posted a 0.4% increase in May after an even bigger 0.6% rise in April. Excluding energy and food, core inflation rose by a larger-than-expected 0.3%.

In corporate news, Mexican conglomerate Alfa SA said a group of shareholders sold 34.0 million shares at a price of 48.50 pesos a share. In a filing with the Mexican stock exchange, Alfa said it paid 844.7 million pesos for 17.4 million of the shares, or 3.0% of its outstanding shares.

The total sale accounted for 5.9% of outstanding shares. Alfa used money from its share buyback fund to purchase the shares at the market price; its shares were higher at the close.

On the research front, a major investment bank upgraded retailer Walmex to "buy" from "neutral," as it sees recent weakness in the firm’s shares as an opportunity to buy. Walmex jumped in response.

Elsewhere, Argentine stocks finally broke out of a seven-session losing streak that had pulled the benchmark Merval Index to a six-month low. The Index ended higher.

Air carrier Aerolineas Argentinas is reportedly negotiating to give the government a 5% stake in the firm in exchange for a fare increase and subsidies for unprofitable routes, according to Spanish news agency Europa Press.

Thomson Financial – www.thomsonfinancial.com

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