Sept. 6 (Bloomberg) -- The Bovespa index advanced the most in three weeks after a measure of U.S. service industries rose more than forecast and Brazil’s inflation in August accelerated at a pace that was in line with economists’ expectations.
The benchmark equity gauge gained 2.9 percent to 56,607.30 at the close of trading at 4:15 p.m. New York time. That was the steepest increase since Aug. 11. Sixty-six stocks rose on the index, while two declined. The real weakened 0.8 percent to 1.6581 per U.S. dollar. The stock exchange will be closed tomorrow for a national holiday.
The U.S. Institute for Supply Management’s index of non- manufacturing businesses increased to 53.3 in August from 52.7 a month earlier. A reading above 50 signals expansion and the median estimate in a Bloomberg News survey of economists called for a reading of 51.
“The ISM report came in better than expected, and everyone was looking forward to these figures as the latest economic data from the U.S. wasn’t so good,” Felipe Casotti, who helps manage 1.2 billion reais ($723 million) at Maxima Asset Management, said in a telephone interview from Rio de Janeiro.
Prices in Brazil, as measured by the benchmark IPCA index, rose 0.37 percent in August from the previous month, pushing the annual rate to 7.23 percent, the national statistics agency said today. The median estimate of 40 analysts in a Bloomberg survey was for a 0.36 percent increase in August.
Brazil’s central bank cut the benchmark Selic rate a half point to 12 percent on Aug. 31 after having raised the rate at each of its past five meetings.
Homebuilders and retailers jumped, with the MSCI Brazil/Consumer Discretionary Index posting the steepest advance among 10 industry groups, gaining 4 percent as traders increased bets for lower borrowing costs in Brazil. Brookfield Incorporacoes SA, Brazil’s fourth-largest homebuilder by revenue, rose 6.4 percent to 6.98 reais, the most in one week.
Lojas Renner SA rose 5.8 percent to 60.50 reais after Brazil’s biggest publicly-traded clothing retailer was raised to “outperform” from “market perform” at Bradesco Corretora.
The yield on the interest-rate futures contracts due in January 2015 fell eight basis points, or 0.08 percentage point, to 11.08 percent.
Financial stocks advanced after Banco BTG Pactual SA said shares’ “recent poor performance is a good opportunity,” according to a note to clients by analysts Marcelo Henriques and Eduardo Rosman.
Banco Bradesco SA rose 3.8 percent to 29.15 reais. Banco do Brasil SA gained 1.6 percent to 27.12 reais. Itau Unibanco Holding SA advanced 1.8 percent to 29.31 reais. All three lenders were given “buy” recommendations in new coverage at BTG Pactual.
The Bovespa entered a bear market on July 27 after plunging 20 percent from its bull-market peak in November. The measure has since extended that drop to 22 percent.
Brazil’s benchmark equity gauge trades at 9.3 times analysts’ earnings estimates, according to data compiled by Bloomberg. That compares to a ratio of 11.4 for the Shanghai Composite Index, 5.7 for Russia’s Micex and 14.1 for India’s Sensex.
Traders moved 6.27 billion reais ($3.78 billion) in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares to a daily average this year of 6.56 billion reais through Aug. 1, according to data from the exchange.
--Editors: Richard Richtmyer, Glenn J. Kalinoski
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