Thursday, March 30, 4:45 PM EST (Thomson Financial): Latin American stocks
extended yesterday's gains, with Brazilian shares getting a boost from
improved hopes for an acceleration of the Brazilian central bank's monetary
easing cycle.
Brazil's Bovespa Index rose 285.19 points, or 0.76%. Mexico's benchmark
Bolsa Index climbed 81.66 points, or 0.43%, while Argentina's Merval Index
added 6.18 points, or 0.34%.
Brazilian stocks climbed, as investors grew more hopeful for a deeper cut
in local interest rates in April. Boosting optimism about interest rates,
Brazil's central bank said in its quarterly inflation report today that Brazil
will likely end 2006 well within the government's inflation target for the
year of 4.5%. Brazil's IPCA consumer price inflation should end 2006 at 3.7%
and accelerate through the end of 2007 to 3.9%, the bank said. The monetary
authority also maintained its forecast for Brazil's 2006 economic growth at
4%.
Adding to positive sentiment, the Getulio Vargas Foundation reported that
the Brazilian General Price Index (IGP-M) dropped 0.23% in March, compared
with a rise of 0.01% in February.
In other economic news, Brazil's gross domestic product in nominal terms
in the fourth quarter of 2005 rose to 521.855 billion reais from 497.356
billion reais in the third quarter, the government's statistics institute IBGE
said.
Helping to ease concerns about the future of Brazil's economic policies,
newly-appointed Finance Minister Guido Mantega said today that the government
will meet ambitious fiscal austerity goals in 2006 under the guidance of a new
economic team. Brazil's government has targeted a primary budget surplus in
2006 equal to 4.25% of gross domestic product. "We will meet the goals with
the utmost rigor," Mantega said.
In related news, Mantega announced two key appointments to the
government's economic team. Government economists Bernard Appy and Carlos
Kawall were named to the posts of deputy minister as treasury secretary,
respectively. Mantega said he will announce more key appointments next week.
In other developments, Social Democracy Party Congressman Rafael Guerra
said a group of Brazilian lawmakers, known as the Pro-Congress Movement and
affiliated with opposition parties, will file a petition next week calling for
the impeachment of President Luiz Inacio Lula da Silva. The move is based on
Lula's alleged participation in breaking the confidentiality of bank records
of a congressional witness that testified against former Finance Minister
Antonio Palocci earlier this month.
Mexican shares continued to rebound today following weakness earlier this
week. Meanwhile, U.S. markets turned mostly lower today. U.S. fourth-quarter
GDP was revised higher to 1.7% from 1.6%, in line with targets, and compared
with growth of 4.1% in the prior quarter. Closer to home, mining firms
advanced on stronger copper prices.
Workers continued to strike at Grupo Mexico's La Caridad copper mine for
the seventh day. Yesterday, the Labor Ministry rejected the National Mining
and Metal Workers Union's ratification of leader Napoleon Gomez Urrutia. The
ministry said that the union's extraordinary general convention held earlier
this month did not meet attendance and other requirements within the union's
own statutes.
A major investment bank upgraded homebuilder Urbi to "buy" from "hold,"
while lifting price targets for several other developers in the sector. The
broker cited the builders' more aggressive expansion plans over the next few
years as part of the reason for its bullish research note.
Argentina also headed higher today; although, investor enthusiasm was more
muted compared to the broader regional markets. A price hike for gas received
mixed reactions.
Enargas, the country's natural gas regulator, has authorized gas
distributors to lift rates for industrial and commercial users by 20%, on
average. The move should help normalize prices within the gas market.
In economic news, the national statistics agency Indec said that Argentina
posted a US $706 million trade surplus in February, slightly less than the US
$734 million surplus posted a year ago. In January, the surplus arrived at US
$837 million.
-- 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
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SOURCE Thomson Financial Corporate Group
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