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Brazil’s Key Interest Rate Expected to Rise

Brazilian equities rose, Thursday, alongside various favorable corporate news items. Despite initial profit taking, Brazil’s market benefited from the country’s solid economic fundamentals. Brazil’s benchmark Bovespa Index firmed 66.15 points, or 0.28%.

Brazilian stocks firmed, after battling back from early profit taking. The benchmark IPCA inflation index increased 0.44% in October, versus 0.33% in September.


The IPCA index is used by Brazil’s central bank as a guide when determining monetary policy. The bank is widely expected to hike its key Selic interest rate by at least a quarter of a percentage point at the close of its monthly two-day monetary policy meeting, which concludes next Wednesday. The Selic rate currently stands at 16.75%.


Turning to corporate items, CVRD displayed its second consecutive record quarterly net profit late Wednesday, as net earnings climbed to 2.30 billion reais in the third quarter from 1.28 billion reais a year before.


The world’s leading iron ore miner cited higher prices and sales, in addition to the divestment of a stake in a local steel company, for the result.


Separately, CVRD ramped up third-quarter copper production at its new Sossego mine by 9.2% to 21,835 tons from the prior quarter when the mine came into operation.


The company also said it set records for iron ore, manganese and bauxite production in the period. Nevertheless, the stock fell.


Additionally, No. 3 Brazilian private bank Unibanco announced that its third-quarter net profit reached 327 million reais, up from 270 million reais one year prior, aided by greater lending as the country’s economy strengthened.


The firm’s earnings were basically in line with analyst forecasts of 324 million reais, on average, as provided by Thomson Financial Brasil.


In deal news, Brazilian paper and pulp companies Suzano and VCP said Wednesday evening that they agreed to purchase Ripasa Celulose e Papel for a total of US$720 million in Brazilian currency and would share its control equally.


However, the market deemed their acquisition of Brazil’s No. 7 wood pulp producer to be expensive, pressuring shares of VCP.


Thomson Financial Corporate Group
www.thomsonfinancial.com/
PRNewswire

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