Bloomberg News

Brazilian Stocks Rise as Fed Minutes Spur Stimulus Speculation

August 22, 2012

Brazilian stocks rebounded from yesterday’s drop as Federal Reserve minutes spurred speculation that U.S. policy makers may provide additional stimulus, buoying the prospects for Latin America’s biggest economy.

Oil producer Petroleo Brasileiro SA contributed the most to the benchmark Bovespa index’s gain, following crude higher. Usinas Siderurgicas de Minas Gerais SA, the steelmaker that had losses in three of the past six quarters, gained the most in two weeks after Deutsche Bank AG said it expects an increase in flat-steel prices. Wireless carrier Tim Participacoes SA sank after Sanford C. Bernstein & Co. lowered its recommendation to the equivalent of hold.

The Bovespa gained 0.8 percent to 59,380.76 at the close of trading in Sao Paulo. Forty-seven stocks rose on the measure while 19 declined. The real weakened 0.1 percent to 2.0177 per U.S. dollar at 5:45 p.m. local time.

“It’s been a while that investors have been waiting for more stimulus in the U.S., and maybe today’s statement was a sign that something will be done in the next policy meeting,” Joao Pedro Brugger, a portfolio manager at Leme Investimentos in Florianopolis, Brazil, said in a phone interview.

Many Fed policy makers said “additional monetary accommodation would likely be warranted fairly soon” unless the economy shows signs of a durable pickup, according to minutes of their July 31-Aug. 1 meeting released today.

Earlier Drop

The Bovespa (IBOV) earlier dropped as much as 0.8 percent as Greece sought more time to carry out policy changes, rekindling concern about Europe’s crisis, and trade data in Japan added to signs that the global recovery may falter.

“Despite the optimism we’ve seen in the equity market lately, economic data keeps coming in weak all around the world,” Rogerio Freitas, a partner at Rio de Janeiro-based hedge fund Teorica Investimentos, said in a phone interview. “There are no signs the global economy is getting closer to a recovery.”

Petrobras, as Petroleo Brasileiro is known, gained 1.2 percent to 21.49 reais. Crude jumped to a three-month high in New York.

Usiminas, as Usinas Siderurgicas is known, rose 6.1 percent to 8.64 reais. Tim sank 4.3 percent to 7.88 reais.

Consumer prices in Brazil, as measured by the IPCA-15 price index, increased 0.39 percent in the month through mid-August, the national statistics agency said today, exceeding the 0.37 percent increase that was the median estimate of 45 analysts surveyed by Bloomberg. Annual inflation quickened to 5.37 percent from 5.24 percent.

Swap Rates

Brazilian swap rates on contracts maturing in January 2014 rose four basis points, or 0.04 percentage point, to 7.93 percent. Clothing retailer Cia Hering dropped 0.9 percent to 44.92 reais, leading losses among companies that sell on credit. Homebuilder Gafisa SA slid 0.7 percent to 4.08 reais.

The Bovespa has climbed 13 percent from this year’s low on June 5 as eased concern about Europe’s crisis and borrowing costs at a record low in Brazil boosted demand for equities. The index trades at 11.7 times analysts’ earnings estimates for the next four quarters, which compares with the ratio of 10.4 times for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 6.75 billion reais ($3.35 billion) in stocks in Sao Paulo, data compiled by Bloomberg show. That compares with a daily average of 7.23 billion reais this year through Aug. 21, according to data compiled by 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: Brendan Walsh at bwalsh8@bloomberg.net


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