Wednesday, July 5, 2006, 4:45 PM EST (Thomson Financial): Latin
American collectively receded on the day, as investor jitters surrounding
North Korea's missile launches pressured global markets. Mexico, meanwhile,
is grappling with the tight outcome of its weekend presidential election.
Brazil's Bovespa Index tumbled 989.31 points, or 2.65%. Mexico's
benchmark Bolsa plunged 814.87 points, or 4.01%, while Argentina's Merval
Index negated 25.32 points, or 1.47%.
Brazilian shares, much like major markets worldwide, moved down on the
day, as concerns about North Korea's missile launches spurred geo-political
tensions and bolstered oil prices beyond US$75 a barrel.
On the economic front, the National Confederation of Industries, or
CNI, reported that industrial capacity fell to 81.3% in May from 81.6% in
the year- ago period, while month-over-month, capacity was up 0.3%.
Meanwhile, crude oil prices soared, hitting US$75.19, as problems at a
Texas refinery, a postponement of talks between Iran and the European Union
on nuclear issues, and the North Korean missile launch combined to prop up
crude oil prices.
On the corporate front, state-run oil firm Petrobras intends to import
20 million cubic meters of liquefied natural gas a day by the year 2011. To
reach this goal, the firm wants to buy or lease two floating LNG
re-gasification vessels.
Elsewhere, Luxembourg-based Arcelor said that its planned takeover by
Mittal Steel does not mean that Mittal must make an offer for Arcelor's
Brazilian subsidiaries.
Within the airline group, a major investment firm lifted its share
price targets for Brazilian airlines TAM and Gol due to favorable
fundamentals.
Mexican shares also took a cue from Brazil and U.S. market declines;
however, it is likely that local politics played the biggest factor in
today's slump.
Following Sunday's presidential election, a distinct winner is still in
question, which is likely to support market volatility until the issues is
resolved. Preliminary results showed that conservative presidential
candidate Felipe Calderon was ahead of Andres Manuel Lopez Obrador by less
than one percentage point. The Federal Electoral Institute, or IFE, today
began the official tally of the results, but the process is expected to
last several days. By today's market close, and 45% of the official tally
complete, the tables have turned with Lopez Obrador holding 37% of the vote
and Calderon 34%.
Argentine issues also took a tumble, partly due to profit-taking. In
economic reports, according to the national statistics agency, or INDEC,
the consumer price index rose 0.5% in June, matching April and May's
results.
-- 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
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SOURCE Thomson Financial Corporate Group
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