Wednesday, May 24, 4:45 PM EDT (Thomson Financial): Latin American
stocks retreated, as investors continued to fret over the outlook for U.S.
inflation and interest rates.
Brazil's Bovespa Index fell 318.04 points, or 0.88%. Mexico's benchmark
Bolsa Index plunged 279.26 points, or 1.46%, while Argentina's Merval Index
plunged 38.40 points, or 2.37%.
Brazilian stocks dipped, amid ongoing concerns that U.S. inflation and
interest rates will continue to rise, potentially leading investors to
rotate funds out of emerging markets like Brazil and into safe-havens such
as U.S. Treasurys. Stronger-than-forecast new home sales data in the U.S.
added to interest-rate jitters.
Helping to limit the market's losses, however, Brazil's central
government posted a 14.9 billion real primary budget surplus in April, up
sharply from the previous month's surplus of 7.0 billion reals and above
market estimates that ranged from 11 billion reals to 13 billion reals.
In other positive news, a major investment bank upgraded a number of
Brazilian stocks today, including retailer Lojas Americanas and power
companies Cemig and Copel.
Also, Moody's Investors Service upgraded the foreign currency issuer
ratings of the Brazilian states of Ceara and Sao Paulo, and the city of
Curitiba, to Ba2 from Ba3.
In other developments, the public's support for the administration of
President Luiz Inacio Lula da Silva rose to 38.3% in May from 37.6% in
April, due largely to an improved economy, according to a public opinion
poll released by the Sensus polling organization.
Elsewhere, Mexican shares sank for a sixth straight session amid
continued U.S. interest-rate uncertainty and caution ahead of the Bank of
Mexico's monetary policy meeting on Friday. Mexico's central bank is widely
expected to leave interest rates unchanged at its monthly meeting Friday.
At it last meeting on April 21, the bank cut rates by 25 basis points, its
ninth straight reduction, but said there was no more room for additional
easing in the foreseeable future.
In local economic data, the Bank of Mexico said today that the consumer
price index fell 0.49% in the first two weeks of May, bringing the annual
inflation rate down to 2.95% from 3.20% at the end of April. The central
bank's target rate is 3%. However, the core index rose 0.07% in the first
half of May.
Argentine issues dropped, in line with regional equities. Weighing on
the Merval, index heavyweight Tenaris fell amid a decline in oil prices.
Bank shares also ended the day lower. Argentine markets will be closed
tomorrow for a national independence holiday.
-- 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
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SOURCE Thomson Financial Corporate Group
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