Monetary Easing in US Brings Record Day to Brazil’s Market

    Latin American stocks powered higher, led by Brazilian shares, on indications the U.S. Federal Reserve is close to ending its interest-rate hiking campaign.

    Brazil’s Bovespa Index surged 1109.99 points, or 2.89%, while Mexico’s benchmark Bolsa Index advanced 187.73 points, or 0.96%, and Argentina’s Merval Index jumped 26.33 points, or 1.39%.

    Brazilian stocks rallied, with the Bovespa surpassing an all-time high, as investors were cheered by tame minutes from the U.S. Federal Reserve’s last interest-rate meeting as well as a drop in U.S. Treasury yields.

    The minutes suggested that the Fed’s current cycle of monetary tightening is nearing an end. "Most [FOMC] members thought that the end of the tightening process was likely to be near and some expressed concerns about the dangers of tightening too much, given the lags in the effects of policy," the summary of the March 27-28 meeting said.

    Higher U.S. interest rates tend to divert investment flows away from emerging markets like Brazil.

    Meanwhile, investors also remained optimistic about the local interest- \rate outlook. Brazil’s central bank is widely expected to extend its run of interest rate cuts at tomorrow’s policy meeting with a reduction of 75 basis points to the Selic rate. Interest rates currently stand at a lofty 16.5%.

    Adding to positive sentiment, Brazil’s Planning Ministry indicated in budget guidelines that it expects Brazil’s primary budget surplus to be maintained at 4.25% of gross domestic production through 2009 amid a continuation of austere fiscal policies.

    In corporate news, oil giant Petrobras said that its board approved the conversion of all shares of its petrochemicals unit Petroquisa into Petrobras shares.

    Petrobras already owns 99% of Petroquisa’s shares. Separately, a major investment bank raised its year-end price target for Petrobras to US$ 105 from US$ 98, "on the back of strong refining margins expected in 1H06."

    Elsewhere, Mexican shares jumped, in line with regional equities, on optimism about U.S. interest rates. Mexico’s bolsa was also supported by continued hopes for a strong first-quarter earnings season, which is expected to gain steam this week and next with a flood of quarterly reports.

    Among individual shares, mining company Grupo Mexico was in focus as a nearly month-long strike continued at its La Caridad copper mine. Last week, the company declared force majeure on copper shipments due to the strike.

    The company said yesterday that it can meet its April commitments, but could have problems next month if the walkouts persist. Grupo Mexico also said yesterday that a continued strike at its zinc mine in Zacatecas may prevent it from meeting orders for refined zinc next month.

    Argentine issues followed Latin American markets higher on expectations for a near-term end to the U.S. monetary tightening cycle. Lending additional support, a monthly survey released by the Argentine central bank showed that economists expect robust economic growth in February.

    According to the survey, the median forecast among economists is for Argentina’s economic activity to have grown 8.3% in February from a year earlier. While that is down from January’s 9.1% growth, it still suggests continued economic strength.

    Thomson Financial – 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

    Embraer Brings 4% of Brazil’s Trade Surplus

    The Brazilian Aircraft Corporation S.A. (Embraer), Brazil’s largest exporter of manufactured goods, closed the ...

    Milton Hatoum

    Brazilian Literary Masterpiece, The Brothers, Becomes Play

    Dois Irmãos (The Brothers), a book by Brazilian author Milton Hatoum, is going to ...

    Brazil’ Bebel Gilberto: A Command Performance

    Last August Bebel Gilberto was supposed to have débuted her new tour in New ...

    Brazil’s Lord Protector

    There is no discussion in which Brazil’s Chief of Staff José Dirceu does not ...

    Doces Bárbaros

    San Francisco Offers Rare Glimpse Inside Brazilian Music in Documentaries

    Yerba Buena Center for the Arts (YBCA) in San Francisco  will screen this month ...

    New York’s One-Million Crowd Celebrates Brazil

    In 1984, near 46th Street, known as the street of the Brazilians in New ...

    Christ the Redeemer

    Rio Rains Close Christ the Redeemer to Tourists For First Time Ever

    Rio’s towering Christ the Redeemer statue and one of the city’s most iconic tourist ...

    The Idea of a FTAA with the US and Without Cuba is Dead, Says Brazil’s Lula

    Brazilian President Luiz Inácio Lula da Silva stressed Friday, July 21, in Argentina, the ...

    US Is Brazil’s Biggest Buyer Followed by Argentina and China

    According to Brazil’s Ministry of Development, Industry and Foreign Trade, in June Brazil’s trade ...

    Brazilian industry

    Brazil Pleasantly Surprised by Year-End Numbers: Industry GDP Is Up 5.3%

    Brazil's processing industry should end this year with a 5.8% growth rate and contribute ...