Brazilian stocks advanced, in spite of a rise in global oil prices. Crude oil prices firmed, following an attack on the U.S. consulate in Saudi Arabia and ahead of an Organization of Petroleum Exporting Countries meeting on Friday.
In other geopolitical news, several bombs exploded around Spain after telephone warnings from callers claiming links to Basque separatist group ETA.
Brazil’s benchmark Bovespa Index climbed 164.53 points, or 0.65%. Brazilian stocks rose to a new record, December 6, closing high for the second-straight session.
Stocks were basically flat earlier in the day, as investors reacted to news that Brazil’s central bank announced its first intervention to purchase U.S. dollars since February.
However, Central Bank President Henrique Meirelles said the bank was not pursuing any sort of target value for the Brazilian real against the greenback when it intervened.
Brazil’s currency has been strengthening steadily versus the dollar in recent weeks, leading to calls from exporters for government action to weaken the real in an effort to spur exports.
Power-sector shares were active, as the market appeared enthusiastic toward the potential of a major wholesale energy auction scheduled for December 7. Analysts remarked that some of Brazil’s generators were well positioned to close sizable deals at the event.
Also, the National Association of Vehicle Manufacturers said Brazil’s auto makers watched production and sales continue to grow in November, alongside the recovery in the domestic economy and stronger exports abroad.
Production rose 5.8% last month to 201,300 vehicles from October, as sales increased 1.4% to 138,800.
Looking ahead, the sector’s main trade group sees new registrations of cars, trucks and buses accelerating 5.2% to 1.62 million in 2005, as production gains 5.4% to 2.3 million vehicles next year.
Turning to research notes, an influential brokerage downgraded major Brazilian steel exporters Gerdau and CST to “neutral” from “buy” recommendations, based on worries over their profitability outlooks.
The brokerage also said it foresees a slowdown in demand growth, and said “China’s large net move from importer to exporter suggests that global inventories could grow quickly, pressuring prices from the second quarter in 2005.”
Thomson Financial Corporate Group