Thursday, June 29, 2006, 4:45 PM EST (Thomson Financial): Latin
American issues extended, and handily outpaced, yesterday's gains, as the
U.S. Federal Reserve raised interest rates by 25 basis points, in line with
expectations. Even more encouraging to Latin American shares was a hint of
a pause to come.
Brazil's Bovespa Index rallied 1652.02 points, or 4.74%. Mexico's
benchmark Bolsa surged 806.50 points, or 4.46%, while Argentina's Merval
Index jumped 57.39 points, or 3.52%.
Brazilian issues rallied today, building momentum following an expected
move on interest rates by the U.S. Fed. Interest rates were lifted by 25
basis points to 5.25%, and indications were given that the rate-tightening
cycle could be nearing an end.
Closer to home, Brazil's National Monetary Council set the country's
IPCA consumer price inflation for 2008 at 4.5%, while reaffirming the same
target for 2006 and 2007.
Meanwhile, the Sao Paulo Federation of Industries, or Fiesp, announced
that industrial production in Sao Paulo advanced a seasonally adjusted 2.7%
in May from April. The latest reading surged 9.3% compared to the year-ago
period.
In corporate reports, Aracruz is planning to expand its pulp output at
an existing unit based in Rio Grande do Sul from the current 430,000 metric
tons per year to 1.3 million metric tons by 2015. The paper and pulp firm
said it may invest as much as US$1.3 billion in the project.
The Brazilian Securities and Exchange Commission suspended trading of
steelmaker Arcelor Brasil's shares due to the potential impact the merger
of its parent firm, Arcelor, with Mittal Steel may have on the firm.
Mexican shares rallied on the session, following yesterday's more muted
gains. Investors managed to brush aside their anticipation for the
presidential election results this Sunday. Positive investor sentiment
regarding a potential pause in U.S. rate hikes lent support to global
markets today.
Select corporate reports also supported the local market. A major
investment bank upgraded Homex to ''buy'' from ''neutral,'' as the
brokerage believes the firm will continue to perform well regardless of
Sunday's outcome.
Argentine stocks also took part in the broad market rally today.
President Nestor Kirchner said that the country posted a record trade
surplus of US$4.125 billion in May.
In corporate news, a major investment bank lifted its rating on
fixed-line provider Telecom Argentina to "peer perform" from
"underperform." The brokerage also increased the firm's earnings estimates
for 2006 and 2007.
-- Linda.Shea@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
Financial, please visit our web site at http://www.thomsonfinancial.com.
SOURCE Thomson Financial Corporate Group
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