Bovespa Futures Gain on Lower Inflation, Interest-Rate Outlook

Bovespa futures gained, a sign the stock gauge may rebound from yesterday’s drop, after inflation slowed more than forecast in Sao Paulo, Brazil’s biggest city, spurring speculation policy makers will have more room to lower borrowing costs to shore up growth.

Card-payment processor Cielo SA (CIEL3) may move after it reported fourth-quarter net income of 504.5 million reais ($292.6 million), exceeding forecasts. Cia. Energetica de Minas Gerais, a state-controlled electricity utility, may be active after it agreed to buy 40 percent of gas distributor Gas Brasiliano Distribuidora SA from Petroleo Brasileiro SA (PETR4).

Bovespa futures rose less than 0.1 percent to 65,850 at 10:47 a.m. in Sao Paulo. The real weakened 0.2 percent to 1.7248 per U.S. dollar.

Consumer prices, as measured by the Foundation Economics Research Institute in Sao Paulo, climbed 0.42 percent in the four weeks ended Feb. 7, below the median estimate of a 0.57 percent increase among 19 analysts polled by Bloomberg.

“The latest inflation figures have come in better than expected, which is positive for stocks, as it shows there may be more room for further rate cuts,” Rogerio Freitas, a partner at hedge fund Teorica Investimentos, said by phone from Rio de Janeiro. “This is particularly positive for companies that depend on domestic consumption, which in this scenario of lower borrowing costs should perform better than the market average.”

The Bovespa has advanced 16 percent this year, after slumping 18 percent in 2011, buoyed by Brazil’s interest-rate cuts, signs of growth in the U.S. and renewed optimism Europe may be closer to solving its debt crisis. The gauge trades at 10.4 times analysts’ earnings estimates, in line with the ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 7.96 billion reais in stocks in Sao Paulo yesterday, data compiled by Bloomberg show. That compares with a daily average of 6.53 billion reais this year through Feb. 3, according to data from the exchange.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net

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