Friday, March 10, 4:45 PM EST (Thomson Financial): Latin American stocks
were mixed to higher, with Brazilian shares posting the biggest gains on
bargain hunting and optimism about local interest rates. Meanwhile, Argentine
issues dipped, as the earnings season continued to wind down with a lackluster
earnings report from Telecom Argentina.
Brazil's Bovespa Index jumped 578.42 points, or 1.59%. Mexico's benchmark
Bolsa Index gained 109.60 points, or 0.60%, while Argentina's Merval Index
lost 2.20 points, or 0.12%.
Brazilian stocks advanced as investors went in search of bargains
following a recent sell-off, and cheered another batch of tame inflation data.
Shares fell the previous four sessions on concerns about rising U.S. Treasury
yields, which reflected expectations for further U.S. interest rate hikes.
Recent hawkish comments from Federal Reserve officials have fueled concerns
that the U.S. monetary tightening cycle may continue longer than previously
expected. Higher U.S. interest rates tend to draw investment away from
emerging markets like Brazil.
Meanwhile, a slew of tame inflation data released today added to the
upbeat outlook for Brazilian interest rates. The official IPCA consumer price
index rose 0.41% in February, down from 0.59% in January, while University of
Sao Paulo figures showed early March inflation of 0.16%, and the Getulio
Vargas Foundation reported that prices fell 0.09% in early March. The data
reinforced expectations that Brazil's central bank will continue, or perhaps
accelerate, its interest-rate cutting cycle. Late Wednesday, the bank reduced
the Selic base interest rate by 75 basis points to 16.5%.
Giving utility shares a boost, Brazil's National Electric Energy Agency
said it will make a final decision on a cut in tariffs charged by state-owned
electric power transmission firm Companhia de Transmissao de Energia Eletrica
Paulista at a meeting Monday.
On the earnings front, budget airline Gol reported a net profit of 147
million reais in the fourth quarter, up from 114 million reais a year earlier.
Mexican shares finally posted gains today, following a string of losing
sessions. A strong U.S. employment report for February raised expectations
that U.S. interest rates will continue to rise.
In corporate news, Grupo Modelo announced last night that its contract
with U.S.-based Gambrinus Co. will end this year as a result of a favorable
ruling for Grupo Modelo. The U.S. firm had started arbitration to challenge
the termination of the contract. Today, a major investment bank upgraded the
Mexican brewer to "overweight" from "neutral."
Within the media group, Televisa's CPO shares moved higher today,
following reports that the firm is leading a consortium to bid for U.S.-based
Univision.
Elsewhere, Wal-Mart de Mexico said that its February same-store sales
leapt 3.9% from a year ago. Total sales last month rose 13% to 12.69 billion
pesos.
Argentine shares decided not to take part in the broader regional rally
today, and opted instead to end little changed. In corporate headlines,
Telecom Argentina posted a net loss of 298 million pesos in the fourth
quarter, as the peso's decline against the greenback pressured the fixed-line
provider's debt load. The firm's operating margins also declined.
-- 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
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SOURCE Thomson Financial Corporate Group
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