Thursday, June 8, 2006, 4:45 PM EST (Thomson Financial): Markets were
mixed to lower, with Brazilian shares rising on tame local inflation data,
while Argentine and Mexican shares fell on continued concerns about rising
interest rates in developed countries.
Brazil's Bovespa Index rose 173.78, or 0.49%. Mexico's benchmark Bolsa
Index fell 155.80 points, or 0.85%, while Argentina's Merval Index lost
13.98 points, or 0.86%.
Brazilian stocks reversed early losses to end higher. Shares were lower
in the early going on interest-rate concerns. The Brazilian Central Bank
said the international market volatility would force it to take a more
cautious stance on interest rates there in the coming months. The current
wave of U.S. rate increases has stoked fears that the world economy will
enter a slump, which analysts said could mean lower commodities prices, and
Brazil--a major world supplier of sugar, soybeans and metals -- would feel
the effects on exports and revenues of exporting companies.
Lending support to the Bovespa, however, Brazil's IPCA consumer price
index showed a greater-than-expected slowdown in May versus April on
declining ethanol and food prices. May inflation slowed to 0.10% from 0.21%
in April, The Brazilian Census Bureau, or IBGE, said. The median estimate
was 0.2%, bringing inflation for the 12 months ended in May to 4.23%, from
4.63% in the 12 months ended April, the first 2006 dip below the 4.5%
year-end inflation target.
In other economic news, industrial employment in Sao Paulo picked up in
May, the Sao Paulo Federation of Industries reported, saying manufacturers
added a total of 15,000 jobs, or an increase of 0.7% versus April. The
figures weren't seasonally adjusted. Jobs growth was more vigorous when
compared with the year-ago month, gaining 3.6% in May compared with May
2005.
And the Brazilian Central Bank released minutes from its May meeting,
which mentioned rising international market volatility as a concern.
International investors have been retreating from the Brazilian Stock
Exchange, analysts say. For the month of June through Monday, foreign
investors made net withdrawals of 76 million Brazilian reais (US $33.6
million).
Elsewhere, Mexican stocks fell on investor anxiety about rising global
interest rates. The emerging-markets correction of the past month has
pulled the IPC down from a record-high close of 21,823 points on May 9,
with the index now up barely 1% from its 2005 close.
Argentine issues also sank today, as ongoing interest rate hikes
continued today in the eurozone, further weighing on exchanges in Latin
America.
Argentina, Brazil and Chile have not yet reached a deal to regulate
energy swaps among the three countries, Chile's Mining and Energy Minister
said, according to local newswire Valor Futuro. A meeting last week between
energy officials led to "a lot of advances, so I think we'll be ready to
reach an accord after one more meeting," said Karen Poniachik. Early last
week, Poniachik said the most recent meeting would likely be the last.
--Michael.O'Brien@contractor.Thomson.com
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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