Bloomberg News

Bovespa Snaps Three-Day Drop as U.S. Data Spurs Global Optimism

April 24, 2012

The Bovespa index rose for the first time in four days after a report that showed home sales exceeded forecasts in the U.S., Brazil’s second-biggest trading partner, rekindled global growth optimism.

Pulp producer Fibria Celulose SA rallied before it announces the results of a share sale. Gol Linhas Aereas Inteligentes SA rebounded from its lowest price since October after a newspaper reported that Delta Air Lines Inc. plans to increase its stake in the Brazilian airline. Meatpacker JBS SA sank after mad cow disease was reported in the U.S., where the company produces more than a third of its beef.

The Bovespa rose 0.7 percent to 61,971.14 at the close of trading in Sao Paulo. Forty-four stocks gained on the gauge while 22 fell. The real was little changed at 1.8815 per U.S. dollar at 5:27 p.m. local time.

“There is some positive news coming from abroad, especially from the U.S.,” Marcio Cardoso, a partner at Titulo Corretora de Valores, said by phone from Sao Paulo. “I don’t see people buying based on long-term prospects for the companies. Everyone seems to be focused on the short term: when there’s a positive piece of news or data, the market goes up, and it can go the other way just as fast.”

Home sales in the U.S. dropped to a 328,000 annual rate in March, a decline of 7.1 percent from a revised 353,000 pace in February that was stronger than initially projected, figures from the Commerce Department showed today in Washington. Economists forecast a rate of 319,000 last month, according to the median estimate in a Bloomberg survey.

China Economy

The Bovespa earlier fell as much as 0.3 percent after a leading index for China’s economy rose more slowly in March, fueling concern about growth in Brazil’s top trading partner. The measure gained 0.8 percent from the previous month to 230.6, the New York-based Conference Board said in a statement today in Beijing, citing a preliminary reading. That compares with a 1 percent rise in February that was revised up from a previously reported 0.8 percent increase.

Fibria jumped 6.7 percent to 16 reais, the most in eight months. The company plans to sell as many as 91.2 million new voting shares in a global public offering, according to a prospectus sent to Brazil’s securities regulator.

Gol rose 4 percent to 10.17 reais after Folha de S.Paulo reported that Delta may increase its stake in the Brazilian airline to 20 percent from 3 percent. The newspaper cited unidentified people close to the negotiations. Gol denied the report in an e-mailed statement today.

JBS Sinks

JBS, the world’s biggest beef producer, slid 0.3 percent to 7.16 reais after earlier plunging 5.2 percent. A case of mad cow disease has been found in a dairy cow in central California, John Clifford, the U.S. Department of Agriculture’s chief veterinarian, told reporters today in a briefing in Washington. It’s the fourth confirmed U.S. case of bovine spongiform encephalopathy, as the disease is known, since the first was discovered in December 2003 in an animal that came from Canada.

Itau Unibanco Holding SA, Latin America’s biggest bank by market value, fell 1.1 percent to 31.45 reais. The lender said adjusted net income, which excludes one-time charges, fell to 3.54 billion reais ($1.88 billion) from 3.64 billion reais a year earlier, according to a regulatory filing. Profit was in line with the average estimate in a Bloomberg survey of eight analysts.

Usinas Siderurgicas de Minas Gerais SA, Brazil’s second- biggest steelmaker, declined 1 percent to 11.25 reais. Usiminas, as the company is known, said its first-quarter net loss more than doubled to 70.8 million reais from 26.1 million in the year-earlier period.

Bovespa Year-to-Date

Brazil’s benchmark equity measure has gained 9.2 percent this year, buoyed by local interest-rate cuts, signs of expansion in the U.S. and speculation Europe may be closer to resolving its sovereign-debt crisis. The gauge has fallen 9.4 percent since this year’s high on March 13 as signs of a slowdown in China spurred speculation that demand for commodities exports may falter.

The Bovespa trades at 10.4 times analysts’ earnings estimates, in line with the 10.4 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 5.52 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 7.27 billion reais this year through April 19, according to data from the exchange.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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