Brazilian stocks rose today, as the U.S. market was bolstered by corporate merger and earnings news. Brazilian shares rallied, in spite of an anticipated upcoming interest rate hike. Brazil’s benchmark Bovespa Index climbed 397.77 points, or 1.67%.
Brazilian stocks rose alongside strength in U.S. equities, despite a pending decision on interest rates. This evening, the Brazilian Central Bank is expected to raise its benchmark Selic interest rate by half a percentage point in an effort to reign in inflationary pressures.
As Brazil’s gross domestic product is forecast to expand by about 4.5% this year, for the strongest growth rate in a decade, and as high oil prices impact prices, the central bank appears likely to tighten monetary policy.
Some analysts noted that with a 50 basis-point increase already largely priced in, a lesser 25- point hike would be bullish for share prices.
Also, Brazil’s September retail sales increased 8.9% in volume terms from a year ago, paced by gains in durable items such as furniture and domestic appliances. In revenue terms, retails sales rose 13.5% from September 2003, slightly above August’s growth of 13.2%.
Turning to corporate news, CVRD stated that it is not in talks with Brascan Corp. regarding the acquisition of the Canadian firm’s controlling stake in large copper and zinc producer Noranda.
The comments came hours after Noranda indicated that it was no longer in exclusive discussions with China’s Minmetals regarding the Chinese state-owned group’s plan to bid for Canada’s Noranda.
Thomson Financial Corporate Group
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