• Categories
  • Archives

Higher Interests in US Lower Brazilian Shares

Latin American markets returned early gains, following U.S. markets lower, after a U.S. Federal Reserve statement signaled no near-term end to its rate-tightening cycle.

As expected, the U.S. Federal Open Market Committee lifted interest rates. Higher U.S. rates can detract investors from emerging markets. Brazilian, Mexican and Argentine shares all posted declines.


Brazil’s benchmark Bovespa Index declined 75.15 points, or 0.30%, while Mexico’s benchmark Bolsa Index negated 64.01 points, or 0.47%. Argentina’s Merval Index fell 7.14 points, or 0.52%.


Brazilian issues reversed their earlier positive course and turned lower following the U.S. FOMC statement. Both domestic and U.S. economic data was in focus today, as well as the re-emergence of local political strife.


As expected, the U.S. Federal Open Market Committee lifted interest rates by another 25 basis points to 3.25%. The Federal Reserve also said that current rates remain “accommodative,” and it kept the “measured pace” language when referring to future rate hikes.


Closer to home, Brazil’s central bank raised its inflation forecast for 2005 to 5.8% from 5.5%, but lowered its 2006 target to 3.7% from 3.8%. Pressures from higher fuel prices and public utility rates caused the hike in the 2005 forecast.


The central bank also reduced its 2005 gross domestic product growth forecast to 3.4% from its prior 4.0% target. Brazilian Central Bank President Henrique Meirelles said that this year’s economic growth is not very strong and will not repeat its robust 2004 performance.


On the political front, Congressman Roberto Jefferson said in an interview with daily newspaper Folha de S. Paulo that high-ranking executives at electric power utility Furnas Centrais Elétricas were involved in the current political bribery schemes. As a result of the accusations, federal prosecutors said they would investigate the matter.


Turning to corporate reports, Aneel, Brazil’s electric power regulator, endorsed a 2.25% average annual price adjustment for Electropaulo. That firm rallied in response.


Mexican receipts also receded, alongside U.S. market declines. The National Statistics Institute, or Inegi, reported that mining production declined 3.8% in April compared to a year earlier, led by receding silver and copper production.


Conglomerate Desc sold its automotive lifters firm Moretsana SA to U.S.-based Eaton Corp. for US $8 million. The Mexican firm intends to use the sale’s proceeds to invest in fixed assets and other businesses.


Meanwhile, satellite operator SatMex filed for bankruptcy under Mexican law. The firm said the filing is “a necessary step in the negotiations to restructure SatMex’s debt obligations. In May, certain creditors filed an involuntary bankruptcy lawsuit in New York against the firm.


Argentine issues declined further today, following a steep sell-off during yesterday’s session after the government announced additional capital controls.


In economic reports, the National Statistics Institute, or Indec, said that May’s trade surplus reached US $1.188 billion, down from US $1.6 billion a year ago. Higher imports contributed to the narrower trade gap.


Thomson Financial Corporate Group – www.thomsonfinancial.com

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Brazil Transfers 342 Oil Exploratory Blocs to Private Hands

Since 1999, when Brazil’s National Petroleum, Natural Gas, and Biofuel Agency (ANP) held the ...

Brazilian-made Embraer-190 jet

Lufthansa Upgrades Order: It Now Wants 30 Brazilian Embraer 190 Jets

Brazilian aircraft builder Embraer confirms that it has entered into a preliminary agreement with ...

Brazil Court Maintains One Year Sentence Against Professor for Defamation

Brazilian Professor Emir Sader was sentenced in October 2006 to one year in prison ...

Brazil’s Aircraft Maker Embraer Sees Tough 2010 Ahead, But Vows No Investment Cuts

Embraer, Brazil's aircraft manufacturing company, should deliver 19 aircraft of the E-Jets family to ...

US Treasury Secretary in Brazil to Discuss Growth

The Growth Group, consisting of Brazil and the United States, will have a meeting ...

Sí£o Paulo, Brazil, Gets Honorable Mention as World’s Robbery Capital

A new United Nations report reveals that fear of crime is driving investment away ...

Brazil’s Gol and American Offer Joint Frequent Flyer Program Plus Code Share

US-based American Airlines, which offers more flights to Brazil than any other US airline, ...

Very Pleased with Drawing Brazil Will Play Group-F in World Cup

The draw has been held for next year’s World Cup football (soccer) tournament in ...

Brazilian Cachaça and Caipirinha Now Available in All 50 US States

Leblon, a Brazilian cachaça (sugar cane liquor) that debuted in the US in February ...

Opposition Chooses Who They Hope Will Be Brazil’s Next President

The opposition in Brazil unified over the weekend behind Aécio Neves who was elected ...