Thursday, May 11, 4:45 PM EDT (Thomson Financial): Latin American
stocks retreated, as investors continued cashing in recent market gains, as
they assess the outlook for U.S. interest rates.
Brazil's Bovespa Index dropped 904.43 points, or 2.17%. Mexico's
benchmark Bolsa Index fell 345.80 points, or 1.59%, while Argentina's
Merval Index sank 38.57 points, or 2.03%.
Brazilian stocks tumbled, as investors continued to fret over the
outlook for U.S. interest rates, while digesting a flood of local earnings
reports. Fueling worries that U.S. interest rates will continue to rise,
oil prices surged today and economic reports showed that U.S. business
sales and inventories both climbed 0.7% in March. That followed comments
from the U.S. Federal Reserve yesterday that left the door open for further
rate hikes.
In earnings news, mining giant CVRD said late yesterday that its first-
quarter net profit jumped 68% to US $1.17 billion from US $698 million a
year earlier on higher iron ore prices and robust sales volumes.
Meanwhile, brewer AmBev posted a first-quarter net profit of 655.9
million reais, up sharply from 144.2 million reais a year ago, as warm
summer temperatures boosted beverage consumption.
Also reporting, Banco Unibanco's first-quarter net profit rose 29.7% to
520 million reais from 401 million reais a year earlier, helped by further
growth in its credit portfolios and higher financial services revenue.
Petrochemical firm Suzano Petroquimica reported a first-quarter net
loss of 28.4 million reais, reversing a year-earlier net profit of 27
million reais.
In other corporate news, Telemar said it will pay dividends of 3
billion reais for 2006 and a further 3 billion reais for 2007, once the
telecom giant has completed a restructuring program.
In local economic data, Fiesp reported that manufacturers in Sao Paulo
state added 40,000 jobs in April from March, representing a rise of 1.92%
in the workforce.
Elsewhere, Mexican shares dropped on continued profit taking and
uncertainty over the outlook for U.S. interest rates. In the news, a major
investment bank said today that it has lowered its exposure to Mexico while
upgrading Peru and Argentina. The bank downgraded Mexico to "underweight,"
citing volatility ahead of the country's July presidential elections.
"Absent the anticipated political noise in the upcoming months, we remain
positive about Mexico's prospects on the macro front for the remainder of
the year," the bank said.
Argentine issues dropped in a quiet news day for the market. Among the
headlines, power generator Endesa Costanera posted a first-quarter net loss
of 12.3 million pesos, compared with a year-earlier profit of 34.9 million
pesos.
-- 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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