Thursday, April 20, 4:45 PM EDT (Thomson Financial): Latin American
stocks were mixed, with Brazilian and Argentine shares falling on profit
taking following a recent rally. Upbeat local economic data in both Brazil
and Argentina helped to limit losses, however. Meanwhile, Mexican shares
extended recent gains, as investors were cheered by strong employment
figures and continued earnings optimism.
Brazil's Bovespa Index dropped 163.15 points, or 0.41%, while Mexico's
benchmark Bolsa Index added 46.45 points, or 0.23%, and Argentina's Merval
Index fell 16.58 points, or 0.87%.
Brazilian stocks slumped, as investors locked in some profits following
a three-day rally on optimism about the outlook for interest rates at home
and in the U.S. Late yesterday, the Brazilian central bank, as expected,
lowered the Selic base interest rate by 75 basis points to 15.75% per year,
marking the seventh-consecutive rate cut amid indications of tame
inflation. Earlier this week, investors were also cheered by minutes from
the U.S. Federal Reserve's last FOMC meeting showing that the end of the
U.S. monetary tightening cycle may be near.
Fueling expectations for further interest-rate cuts in Brazil, the
private Getulio Vargas Foundation reported that its General Price Index, or
IGP-M, dipped 0.5% in the 10 days through April 20, compared with a 0.1%
decline in the same period in March. The data helped to ease concerns about
the inflationary impact of high global oil prices.
Adding to positive sentiment, Brazil posted a current account surplus
of US$1.35 billion March, up from February's surplus of US$725 million, the
central bank said. That brought the 12-month current account surplus to
US$13.32 billion, or 1.61% of gross domestic product.
On a less upbeat note, the Brazilian Census Bureau (IBGE) said that
Brazil's official jobless rate rose to 10.4% in March from 10.1% in
February.
In corporate news, Banco do Brasil S.A. was in focus after Brazil's
national monetary council approved late yesterday an increase in foreign
capital in the bank to 12.5% from 5.6%.
Elsewhere, Mexican shares extended a recent run-up on continued
optimism about the first-quarter earnings season. Cement giant Cemex late
yesterday reported a 14% gain in first-quarter net profit to US$505 million
from US$444 million in the year-earlier period. In addition, the company
reached its sales goals.
Lending additional support to the market, the National Statistics
Institute reported late in today's trading session that Mexico's
unemployment rate fell to 3.4% in March from 3.6% in February.
In corporate news, Televisa said a fund owned by billionaire Carlos
Slim's son bought about a 2.8% stake in U.S. Spanish-language television
firm Univision Communications.
The market's gains were limited somewhat today by investor caution
ahead of the Bank of Mexico's monthly policy meeting tomorrow. The bank is
widely expected to pause or end its eight-month monetary easing cycle,
leaving the overnight rate at 7.25%.
Argentine issues dipped, as investors took profits following a recent
rally. In economic news, national statistics agency INDEC reported today
that its index of economic activity, which is a proxy for gross domestic
product, surged 9.5% in February from a year earlier and climbed 1% from
January. On a month-on-month basis, GDP had been flat in January and
December. The data suggests that the Argentine economy, which grew a robust
9.2% for all of 2005, remains on solid footing.
-- 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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