Latin American stocks were mixed, with Brazilian and Argentine shares falling on profit taking following a recent rally. Upbeat local economic data in both Brazil and Argentina helped to limit losses, however.
Meanwhile, Mexican shares extended recent gains, as investors were cheered by strong employment figures and continued earnings optimism.
Brazil’s Bovespa Index dropped 163.15 points, or 0.41%, while Mexico’s benchmark Bolsa Index added 46.45 points, or 0.23%, and Argentina’s Merval Index fell 16.58 points, or 0.87%.
Brazilian stocks slumped, as investors locked in some profits following a three-day rally on optimism about the outlook for interest rates at home and in the U.S.
The Brazilian central bank, as expected, lowered the Selic base interest rate by 75 basis points to 15.75% per year, marking the seventh-consecutive rate cut amid indications of tame inflation.
Earlier this week, investors were also cheered by minutes from the U.S. Federal Reserve’s last FOMC meeting showing that the end of the U.S. monetary tightening cycle may be near.
Fueling expectations for further interest-rate cuts in Brazil, the private Getúlio Vargas Foundation reported that its General Price Index, or IGP-M, dipped 0.5% in the 10 days through April 20, compared with a 0.1% decline in the same period in March. The data helped to ease concerns about the inflationary impact of high global oil prices.
Adding to positive sentiment, Brazil posted a current account surplus of US$ 1.35 billion March, up from February’s surplus of US$ 725 million, the central bank said. That brought the 12-month current account surplus to US$ 13.32 billion, or 1.61% of gross domestic product.
On a less upbeat note, the Brazilian Census Bureau (IBGE) said that Brazil’s official jobless rate rose to 10.4% in March from 10.1% in February.
In corporate news, Banco do Brasil S.A. was in focus after Brazil’s national monetary council approved late yesterday an increase in foreign capital in the bank to 12.5% from 5.6%.
Elsewhere, Mexican shares extended a recent run-up on continued optimism about the first-quarter earnings season. Cement giant Cemex late yesterday reported a 14% gain in first-quarter net profit to US$505 million from US$444 million in the year-earlier period. In addition, the company reached its sales goals.
Lending additional support to the market, the National Statistics Institute reported late in today’s trading session that Mexico’s unemployment rate fell to 3.4% in March from 3.6% in February.
In corporate news, Televisa said a fund owned by billionaire Carlos Slim’s son bought about a 2.8% stake in U.S. Spanish-language television firm Univision Communications.
The market’s gains were limited somewhat today by investor caution ahead of the Bank of Mexico’s monthly policy meeting tomorrow. The bank is widely expected to pause or end its eight-month monetary easing cycle, leaving the overnight rate at 7.25%.
Argentine issues dipped, as investors took profits following a recent rally. In economic news, national statistics agency INDEC reported today that its index of economic activity, which is a proxy for gross domestic product, surged 9.5% in February from a year earlier and climbed 1% from January. On a month-on-month basis, GDP had been flat in January and December. The data suggests that the Argentine economy, which grew a robust 9.2% for all of 2005, remains on solid footing.
Thomson Financial – www.thomsonfinancial.com