Wall Street and Low Inflation Give Brazil a Boost

    Latin American stocks were mostly higher, with Brazilian and Mexican stocks posting robust gains, in line with a rally on Wall Street. Brazilian shares were further boosted by tame inflation data.

    Brazil’s benchmark Bovespa Index rose 332.92 points, or 1.17%, while Mexico’s benchmark Bolsa Index climbed 173.31 points, or 1.17%. Argentina’s Merval Index fell 2.88 points, or 0.18%.


    Brazilian stocks rose on encouraging inflation news. The IPCA Broad Consumer Inflation Index slowed to 0.17% in August from 0.25% in July, meeting the average analyst estimate.


    The declining inflation rate reinforced expectations for a cut in the Selic base interest rate when the Brazilian Central Bank meets next Tuesday and Wednesday.


    The Selic rate is currently 19.75%. Many financial market analysts are now predicting a cut of as many as 50 basis points in the rate next week.


    In other economic news, Brazil’s Applied Economics Research Institute raised its forecast for 2005 gross domestic product growth to 3.5% from its previous estimate of 2.8%. The institute also lowered its forecast for 2005 inflation to 5.3% from 6.3%.


    Lending additional support to equities, the government reopened its 2025 bond in a move that could bring as much as $1 billion in additional reserves into the country, according to news services.


    Among individual shares, state oil company Petrobras climbed following reports the company made a major find of light crude oil off the southern coast of Brazil.


    In other corporate news, Braskem told Dow Jones Newswires that it will proceed with a multimillion dollar project in Bolivia. Separately, airline Gol warned that its third-quarter earnings could be negatively impacted from surging crude oil prices.


    Elsewhere, Mexican shares posted robust gains, in line with their U.S. counterparts. North of the Rio Grande, stocks got a lift from declining oil prices and a rise in the ISM services index to 65.0 from 60.5 in July, the highest reading since April 2004.


    Closer to home, President Vicente Fox submitted a budget proposal that is based on 2006 GDP growth of 3.6%, up from its outlook for 3.5% growth in 2005. Also of note, in the budget plan, Petroleos Mexicanos intends to invest 129.6 billion pesos in its operations next year.


    On the corporate front, cement titan Cemex led the market higher, as investors continue to bet that the firm will play a major role in helping to rebuild the Gulf region in Hurricane Katrina’s aftermath.


    Separately, workers at Grupo Mexico’s Cananea copper complex in northwestern Mexico voted in favor of a proposed contract revision. Terms of the deal were not immediately available.


    Meanwhile, Argentine shares ended marginally lower on mild profit-taking, although healthy volume indicated local investors are putting fresh funds in the market, according to news services.


    On the economic front, Economy Minister Roberto Lavagna reiterated the government’s objectives of a competitive exchange rate and a fiscal surplus.


    In company news, the head of the Argentine unit of Brazil’s Petrobras stated that the firm has no plans to hike gas or diesel pump prices, hinting that a recent call for higher prices by retailers is not being heeded due to government resistance.


    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’s Eco Artist Uses Recycled Wood

    Two panels by Brazilian artist HeloÀ­sa Crocco decorate the entry hall of Hilton Creek, ...

    Fast Times in Lula’s Brazil

    The sudden resurgence of the real has scared some people, including President Lula. In ...

    Copacabana Hotel

    Worried with Brazil’s Image Government Steps In to Prevent Gouging at Rio +20

    The Brazilian government stepped in and negotiated a reduction of at least 20% in ...

    A new era of gold in the making

    Despite its gold-rich soil Brazil was never capable of exploring the country’s gold reserves ...

    Building

    Construction Works in Brazil Up 13% to US$ 328 Billion

    The investment in Brazil on construction works was US$ 328 billion last year, according ...

    Ousted president Manuel Zelaya

    Zelaya and 13 Friends Spend Holidays in Brazil Embassy in Spirit of Resistance

    The deposed Honduran president Manuel Zelaya and his wife spent Christmas eve in the ...

    Rede Globo's helicopter

    Drug Traffickers in Rio Hit TV Globo’s Chopper

    Brazilian drug traffickers fired shots at a TV Globo helicopter in Rio de Janeiro ...

    Embraer Jet 195

    Brazil’s Embraer to Deliver Over 200 Jets in 2008

    Brazilian aircraft maker Embraer, the world's leading manufacturer of commercial jets with up to ...

    Lojas Americanas in São Paulo, Brazil

    Brazilians Hit Record High in Satisfaction and Expectations

    Brazilians have never been so happy with the present and so confident with the ...