Brazilian shares tumbled, as investors took profits and the U.S. dollar strengthened. Brazilian stocks fell amid fears of U.S. monetary policy tightening. Brazil’s benchmark Bovespa Index collapsed 873.97 points.
Brazilian receipts suffered from further profit taking and fears of additional interest rate hikes by the U.S. Federal Reserve Board.
Brazilian analysts interpreted the minutes from the Fed’s December meeting as a precursor to further gradual interest rate increases in the U.S., which could draw investment away from Brazil.
Minutes from the Federal Open Market Committee’s December 14 meeting showed a number of its members were concerned that the dollar’s recent depreciation, higher energy costs and a possible slowdown in productivity growth may boost inflation.
However, overall the FOMC said it “saw the risks to stable underlying inflation as still balanced.”
Shares of Petrobras fell, after the local Agência Estado newswire reported that the state oil firm increased its price for jet fuel by 4.8%.
Also, leading Brazilian news company Grupo Folha stated that it plans to consolidate its print and Internet assets into a single holding company called Folha-UOL SA, with the ultimate goal of floating shares on the local stock market.
Thomson Financial Corporate Group
www.thomsonfinancial.com