The Bovespa (IBOV) index rose to the highest since May as a gain in commodities prices lifted Brazilian producers after a report showed U.S. payrolls increased more than forecast in July.
Oil producer Petroleo Brasileiro SA and steelmaker Usinas Siderurgicas de Minas Gerais SA followed crude and metals higher. Usiminas’s competitor Gerdau SA, which generated 38 percent of its 2011 revenue in North America, rose to the highest since March. Gafisa SA led homebuilders higher as concern eased that the global slowdown will curb the recovery in Latin America’s biggest economy.
Brazil’s benchmark equity measure added 3.1 percent to 57,255.22 at the close in Sao Paulo, the highest since May 14. The gauge is up 1.2 percent this week. Sixty-one stocks gained on the index today while five dropped. The real rose 1 percent to 2.0284 per U.S. dollar. The Standard & Poor’s GSCI index of 24 raw materials advanced 2.8 percent. Commodities producers account for about 42 percent of the Bovespa index’s weighting.
“The payroll figures in the U.S. were positive and pushed stocks higher,” Hamilton Moreira, an equity strategist at Banco do Brasil SA (BBAS3), said by phone from Sao Paulo. “In Brazil, economic growth should pick up soon, interest rates are falling and inflation seems to be under control. If there’s a more favorable external outlook, the equity market should post a full recovery.”
Payrolls in the U.S. increased 163,000 following a revised 64,000 rise in June that was less than initially reported, Labor Department figures showed today in Washington. The median estimate of 89 economists surveyed by Bloomberg was for a gain of 100,000.
Petrobras, as Petroleo Brasileiro is known, added 1.7 percent to 19.94 reais. The producer said in a regulatory filing that it found “good quality” oil at the third well it drilled in a field in deep waters of the Santos Basin where the company found a layer of oil 93 meters (305 feet) thick.
Usiminas jumped 9.1 percent to 7.90 reais. Gerdau gained 3.1 percent to 18.90 reais.
The Bovespa has dropped 16 percent from this year’s high on March 13 as the debt crisis in Europe worsened and growth in Brazil faltered. The index trades at 10.9 times analysts’ earnings estimates for the next four quarters, which compares with the 13.4 ratio for India’s Sensex Index, data compiled by Bloomberg show. Mexico’s IPC Index trades at a 16.1 ratio after rising 11 percent this year.
“The Bovespa looks cheap,” Otavio Vieira, a partner at hedge fund Fides Asset Management, said by phone from Rio de Janeiro. “It’s not an absolute bargain, but it’s cheaper than most of the biggest emerging markets. There’s room for a rebound.”
Gafisa, Brazil’s sixth-biggest homebuilder by sales, surged 14 percent to 2.88 reais. Larger competitor Brookfield Incorporacoes SA jumped 8.7 percent to 3.39 reais. Real estate companies benefit from lower borrowing costs in Brazil and could outperform once the equity market in general rebounds, Vieira said.
Apparel retailer Marisa Lojas SA declined 0.4 percent to 22.36 reais after reporting adjusted net income of 47.6 million reais ($23.5 million) in the second quarter, trailing analysts’ estimates.
Trading volume was 6.53 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 7.2 billion reais this year through Aug. 2, according to data compiled by the exchange.
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