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Brazil Follows U.S. and Gets Back to Black

Latin America took part in U.S. market enthusiasm, led by Brazil. Latin American receipts sharply rebounded late in the session, following the release of the United States Beige Book.

The Federal Reserve’s "Beige Book" indicated that the U.S. economy grew at a moderate or gradual pace in most parts of the country in September, despite the impact of recent hurricanes.

Meanwhile, crude oil prices declined, after the U.S. Energy Department reported a larger-than-expected build in crude supplies and a rise in gasoline stocks.

Closer to home, investors are looking forward to the Brazilian Central Bank’s decision on interest rates, due out shortly, which could see up to a 50 basis point cut.

Brazil’s Bovespa Index jumped 229.20 points, or 0.79%. Mexico’s benchmark Bolsa Index rose 27.11 points, or 0.18%, while Argentina’s Merval Index leapt 11.62 points, or 0.73%.

In Brazil, investors focused on a widely expected interest rate cut, set for this evening. Meanwhile, São Paulo’s Fipe research institute said that its consumer price index rose 0.64% in the four weeks ended October 15, compared to a 0.59% acceleration in the four weeks ended October 7. Higher food and housing prices were cited for the uptick.

In other economic reports, Fiesp reported that industrial employment in São Paulo edged up 0.61% in September from August. For the 12 months through September, the state’s industrial workforce jumped 3.74% over the prior 12- month period.

Within the steel sector, the Brazilian Steel Institute reported that crude steel production in the country declined 7.5% in September, compared to the corresponding period a year ago. For the first nine months of this year, crude steel output fell 4.1% to 23.656 million tons from a year ago.

In corporate news, according to Estado newswires, state-run oil firm Petrobras said that it will invest 1.4 billion reais in the production blocks it obtained earlier this week in a government auction.

Brewer AmBev announced that domestic beer sales volumes jumped 3.4% in the third quarter from a year ago, while beer sales, excluding Brazil, surged 10.7% last quarter. Meanwhile, soft drink sales rose 6.1% in the third quarter, while sales volumes leapt 8.1% in the rest of the region.

Mexican shares turned the corner late in the session, ending positively. A late-released U.S. economic report showing stability in the country helped boost U.S. and international markets. Investors also focused on the latest batch of earnings reports released in Mexico.

On that note, home builder Geo said that its third-quarter net profit jumped nearly 32% to 267.4 million pesos from 202.7 million pesos a year earlier on a 24% leap in sales to 2.66 billion pesos. Operating profit advanced 27% to 461.3 million pesos. Geo sold 9,624 homes last quarter, up from 8,600 homes in the year-earlier period.

Within the wireless phone group, Iusacell posted a wider net loss of 435 million pesos in the third quarter from 294 million pesos a year ago, mostly due to lower foreign exchange gains. Meanwhile, higher income from post-paid contract customers helped to push the firm’s revenues up 27% to 1.55 billion pesos. EBITDA jumped 39% to 189 million pesos.

Meanwhile, Argentina took part in the broader regional and U.S. advance. Investors are still awaiting this weekend’s congressional elections before making more of a commitment to Argentina. Also, options contracts expire tomorrow and Friday.

Thomson Financial Corporate Group – www.thomsonfinancial.com

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