Fed Hints of Interest Pause Give Brazilian Market a Boost

Latin American issues extended, and handily outpaced, yesterday’s gains, as the U.S. Federal Reserve raised interest rates by 25 basis points, in line with expectations. Even more encouraging to Latin American shares was a hint of a pause to come.

Brazil’s Bovespa Index rallied 1652.02 points, or 4.74%. Mexico’s benchmark Bolsa surged 806.50 points, or 4.46%, while Argentina’s Merval Index jumped 57.39 points, or 3.52%.

Brazilian issues rallied today, building momentum following an expected move on interest rates by the U.S. Fed. Interest rates were lifted by 25 basis points to 5.25%, and indications were given that the rate-tightening cycle could be nearing an end.

Closer to home, Brazil’s National Monetary Council set the country’s IPCA consumer price inflation for 2008 at 4.5%, while reaffirming the same target for 2006 and 2007.

Meanwhile, the São Paulo Federation of Industries, or Fiesp, announced that industrial production in São Paulo advanced a seasonally adjusted 2.7% in May from April. The latest reading surged 9.3% compared to the year-ago period.

In corporate reports, Aracruz is planning to expand its pulp output at an existing unit based in Rio Grande do Sul from the current 430,000 metric tons per year to 1.3 million metric tons by 2015. The paper and pulp firm said it may invest as much as US$ 1.3 billion in the project.

The Brazilian Securities and Exchange Commission suspended trading of steelmaker Arcelor Brasil’s shares due to the potential impact the merger of its parent firm, Arcelor, with Mittal Steel may have on the firm.

Mexican shares rallied on the session, following yesterday’s more muted gains. Investors managed to brush aside their anticipation for the presidential election results this Sunday. Positive investor sentiment regarding a potential pause in U.S. rate hikes lent support to global markets today.

Select corporate reports also supported the local market. A major investment bank upgraded Homex to ”buy” from ”neutral,” as the brokerage believes the firm will continue to perform well regardless of Sunday’s outcome.

Argentine stocks also took part in the broad market rally today. President Nestor Kirchner said that the country posted a record trade surplus of US$ 4.125 billion in May.

In corporate news, a major investment bank lifted its rating on fixed-line provider Telecom Argentina to "peer perform" from "underperform." The brokerage also increased the firm’s earnings estimates for 2006 and 2007.

Thomson Financial – www.thomsonfinancial.com

Tags:

Ads

You May Also Like

Brazil Adopts DuPont System to Protect Food Chain Against Pathogens

The Brazilian Ministry of Agriculture has selected the DuPont Qualicon RiboPrinter system, for its ...

Reliving Brazil’s World Cup Excitement

In the midst of all the commotion, someone yelled "pentacampeão," which means five-time champion. ...

McDonald’s Buys in Brazil the Islamic Friendly Meat It Needs

Of the total exported by hamburger producer Braslo, 50% were directed to the Arab ...

Brazil’s Central Bank New 19.25% Interest Rates Draw Unions’ Ire

Brazil’s Central Bank’s Monetary Policy Committee (Copom) decided, yesterday (16), to raise the annualized ...

Number 4: Brazil’s Petrobras Bigger than Coca-Cola, GE and Google

Petrobras, the Brazilian state-controlled oil and gas multinational ranked fourth in the list of ...

Glorious Leaps

In 1952 in Helsinki, Adhemar was continuously cheered by the public on a memorable ...

Brazil’s Coffee Harvest Grows 27%

Brazil's coffee crop this year is going to total 46 million 60-kilogram bags of ...

How Big Oil Can Avoid Being Left Out in the Cold Now that Brazil Is Hot Property

The recent discovery of potentially vast oilfields buried beneath a thick layer of salt ...

Brazil: Violent Death Grows 14% in a Decade

In 2002, 16.3% of male deaths in Brazil were due to violent causes. In ...

The Zika Fear: There’s Still Time to Stop Rio’s Olympic Games

Since the outbreak of the Zika virus in Latin America in May 2015, Brazilian ...