The Bovespa (IBOV) index snapped a two-day decline as steelmaker Usinas Siderurgicas de Minas Gerais SA led gains among steelmakers amid optimism the U.S. will resolve its budget crisis, boosting demand for Brazilian exports.
Oil company OGX Petroleo & Gas Participacoes SA (OGXP3) contributed the most to the equity gauge’s advance, while Vale SA (VALE3) rose the most this month. Power utility Centrais Eletricas Brasileiras SA (ELET6), also known as Eletrobras, plunged the most in 15 years after Barclays Plc (BARC) cut the stock to the equivalent of sell.
The Bovespa climbed 1.9 percent to 56,450.86 at the close of trading in Sao Paulo. The real strengthened 0.1 percent to 2.0823 per dollar. Commodities jumped as speculation mounted that U.S. officials may reach a deal to avoid $607 billion of automatic tax increases and spending cuts after House Speaker John Boehner and White House Press Secretary Jay Carney both described a Nov. 16 meeting with President Barack Obama as constructive.
“Investors all over the world were very concerned about the so-called fiscal cliff, so the positive signs coming from the meeting provide relief for the Bovespa today as commodities rise,” Luis Gustavo Pereira, an analyst at Futura Corretora, said in a phone interview from Sao Paulo.
The Standard & Poor’s GSCI index of 24 raw materials gained 2.1 percent.
Usiminas, as the Brazilian steelmaker is known, jumped 6.5 percent to 11.39 reais. Cia. Siderurgica Nacional SA advanced 4.1 percent to 10.23 reais, the second-biggest gainer among steelmakers. Gerdau SA (GGB:US) added 2.8 percent to 17.82 reais.
Vale rose 1.2 percent to 35.07 reais.
Eletrobras fell 15 percent to 9.81 reais, the steepest one- day drop since October 1997. Barclays cut the stock to the equivalent of sell from neutral because of “unfavorable” conditions to renew licenses under a government plan to cut rates, Sao Paulo-based analyst Francisco Navarrete wrote in a report today. Shares have slumped 47 percent since the government announced the plan to cut rates by as much as 28 percent on Sept. 11.
OGX added 7.5 percent to 4.89 reais as crude advanced to a one-month high in New York amid concern that Mideast unrest will disrupt supply. Israel will keep attacking Gaza and may intensify operations, Defense Minister Ehud Barak said.
The Bovespa’s 30-day volatility, a measure of price swings in the index, rose to 19.7 today after reaching this year’s low of 14.7 on Oct. 25.
“It’s too early to say we’re now in a positive trend because there are still many uncertainties regarding the situation in the U.S. and the political instability in Israel,” Jose Luiz Garcia, a portfolio manager at Rio de Janeiro-based Mercatto Gestao de Recursos, said by phone. “Investors who are trying to create strategies based on expectations for the Brazilian economy and perspectives for its companies feel very lost. International news is what’s really driving the market.”
The Bovespa has climbed 7.6 percent from this year’s low on June 5 as stimulus from central banks around the world eased economic concern and borrowing costs at a record low in Brazil boosted equity demand.
Trading volume was 5.4 billion reais in stocks in Sao Paulo today, according to data compiled by Bloomberg. Brazilian markets will be closed tomorrow for a holiday.
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