Tuesday, April 11, 4:45 PM EDT (Thomson Financial): Latin American
stocks dropped, with Brazilian shares posting the biggest losses on
continued worries about the impact of rising oil prices on the inflation
and interest-rate outlooks at home and abroad.
Brazil's Bovespa Index sank 573.54 points, or 1.49%. Mexico's benchmark
Bolsa Index fell 83.20 points, or 0.43%, while Argentina's Merval Index
declined 13.63 points, or 0.74%.
Brazilian stocks dropped, extending yesterday's sell-off amid continued
concerns about rising U.S. interest rates and oil prices. Oil prices have
posted sizable gains in recent sessions on strong global demand and
concerns about potential supply disruptions due to uprisings in Nigeria and
a standoff between the U.S. and Iran over its nuclear program. Moreover
investors fear that rising global energy costs will fuel inflation, forcing
the U.S. Federal Reserve to continue raising interest rates and potentially
impeding the Brazilian central banks move to loosen its monetary policy.
On the political front, the Sensus group released a poll today showing
Brazilian President Lula with 37.5% of voter preferences, against only
20.6% for Social Democratic Party rival Geraldo Alckmin and 15% for
possible Brazilian Democratic Movement candidate Anthony Garotinho.
President Lula's lead over his opponents was weaker than in a February
Sensus poll, but his level of approval rose slightly.
Elsewhere, Brazil's largest telecom company, Telemar, was in focus amid
mounting speculation that Portugal Telecom will make an offer for a stake
in the company.
Shares of paper and pulp company Votorantim were active after a major
investment bank upgraded the stock to overweight, saying "pulp and paper
markets look to remain tighter for longer than we previously anticipated."
In economic news, industrial employment in Sao Paulo state rose 0.29%,
or by a net 6,038 jobs, in March from February.
Mexican shares moved lower in pre-holiday trading and on low volume, as
local markets will be closed Thursday and Friday ahead of the Easter
holiday. Meanwhile, U.S. weakness was also a factor, as continued strength
in crude oil prices and concerns regarding Iran and Nigeria pressured the
market.
Meanwhile, a major investment bank raised its price target on
homebuilder Ara to 59.2 pesos from 56 pesos, as the firm's planned dividend
is expected to "boost profitability ratios." Ara shares jumped higher on
the day.
Within the steel group, Notimex, the government news agency, announced
that strikers at Mittal Steel's plant in the Mexican port of Lazaro
Cardenas agreed to return to work today. The local chapter of the National
Mining and Metal Workers Union decided to end the walkout when the firm
recognized Napoleon Gomez Urrutia as national leader of the union.
Meanwhile, copper miner Grupo Mexico declared force majeure earlier today
on select deliveries due to the strike at its La Caridad copper mine.
Home construction firm Geo announced that it expects to post
first-quarter net profit gains of between 23.1% and 23.4%, compared to the
year-earlier period, with revenue growth surpassing 20%.
Turning to telecom news, Telmex and America Movil asked for approval
from Venezuela to bid for the remaining shares of CANTV. Before a decision
can be made, CNV, Venezuela's securities regulator, will review the
proposal, while telecom regulator Conatel anti-monopoly and unit
Precompetencia must give a favorable ruling.
Argentine shares witnessed some profit-taking today, after the key
Merval Index reached a fresh record high yesterday. Similar to Mexico,
pre-holiday trading also played a role.
-- 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 Thomson
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SOURCE Thomson Financial Corporate Group
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