Wednesday, February 15, 4:45 PM EST (Thomson Financial): Latin American
stocks were mostly higher, as a positive assessment of the U.S. economy's
growth outlook from the new U.S. Federal Reserve chairman helped to buoy
investor sentiment. Gains in Mexico's bolsa were limited by data showing
slower-than-expected economic growth in Mexico in the fourth quarter.
Brazil's Bovespa Index jumped 612.42 points, or 1.67%. Mexico's benchmark
Bolsa Index climbed 146.15 points, or 0.81%, while Argentina's Merval
Index dipped 0.53 point, or 0.03%.
Brazilian stocks posted robust gains, as investors were heartened by
comments from U.S. Federal Reserve Chairman Ben Bernanke that suggested
the U.S. economy is on solid footing and inflation concerns are not
growing.
In his first semi-annual testimony before the U.S. congress, Fed chairman
Ben Bernanke gave an upbeat assessment of the economy's growth prospects
and suggested that further interest-rate hikes may be necessary. Bernanke
said long-term inflation expectations appear "well anchored," while the
latest employment and consumer spending data "suggests that the economic
expansion remains on track." He said higher energy prices could still
spill over into wider price inflation, and strong demand could cause
output to "overshoot," putting further upward pressure on prices. "In
these circumstances, the FOMC judged that some further firming of monetary
policy may be necessary, an assessment with which I concur," Bernanke said
in prepared remarks. Investors were somewhat relieved that Bernanke's
assessment of the economy and inflation did not stray significantly from
the tone of previous commentary from former Fed Chief Alan Greenspan.
In corporate news, mining giant Companhia Vale do Rio Doce (CVRD) received
an upgrade by an influential investment bank to "outperform" from "peer
perform" on expectations of a higher-than-anticipated increase in iron-ore
prices in 2006 contract negotiations. "Given our new estimates and the
recent nearly 10% pullback in the shares,
we are upgrading our recommendation to outperform from peer perform," the
bank said.
A state government spokesman confirmed that electric utility Companhia
Paranaense de Energia SA (Copel) has offered El Paso Corp. US$190 million
for a 60% stake in UEG Araucaria.
Late yesterday, supermarket chain CBD said its nominal same-store sales
inched up 0.3% in January compared with the same month a year ago.
Same-store sales when adjusted for inflation dropped 5.1% in January from
a year earlier.
Mexican shares continued to move higher today, despite some disappointment
in the GDP figures. Mexico's gross domestic product growth slowed to 3% in
2005 from 2004's 4.2% growth rate. Fourth-quarter GDP advanced 2.7% from a
year ago, below analyst expectations, and advanced 0.59% from the third
quarter on a non-annualized, seasonally-adjusted basis.
In earnings news, paper products firm Kimberly Clark de Mexico SA's
fourth-quarter net profit declined to 926.3 million pesos from 986.7
million pesos a year ago, partly due to the strong domestic currency
increasing financial costs. Sales advanced to 5.61 billion pesos from 5.23
billion pesos, while operating profit rose to 1.40 billion pesos from 1.32
billion pesos.
Argentina was just about unchanged on the day, as investors continue to
await the arrival of corporate earnings before committing money to the
market.
On the earnings front, financial services provider Grupo Galicia said that
its net profit for the fourth quarter arrived at 27.5 million pesos,
reversing a year-earlier loss of 35.7 million pesos. For the full year,
the firm's net profit was 107.2 million pesos, up from a loss of 109.9
million pesos in 2004.
Telefonica de Argentina signed a letter of understanding with the
government today, which could eventually solidify a new long-term
contract. That firm, along with Telecom Argentina, has been negotiating
contracts for more than two years.
-- Paul.Davee@thomson.com; Thomson Financial Corporate Services
This is Thomson Financial Corporate Services Latin American Commentary.
The information herein is believed to be true and accurate, we take no
responsibility for inaccurate information and reserve the right to update
our reports. If you have any questions please e-mail James Sang at
james.sang@tfn.com or call 646.822.6233. For more information about
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SOURCE Thomson Financial Corporate Group
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