Bovespa-index futures advanced after a report showing industrial production contracted more than expected spurred traders to increase bets that Brazil may hold the benchmark lending rate at a record low for longer.
Banco Bradesco SA (BBDC4) may move after executive director Sergio Clemente said the Brazilian bank is planning to expand in Latin America and the U.K. Homebuilder Rossi Residencial SA (RSID3) may be active after saying it will turn away from government-sponsored projects aimed at low-income families in favor of higher-end projects in its 2013-2015 business plan.
Bovespa-index futures contracts expiring in April climbed 0.4 percent to 56,150 at 9:09 a.m. in Sao Paulo. Brazil’s swap rates on contracts due in January 2015 fell 0.05 percentage point to 8.44 percent. The real gained 0.2 percent to 2.0178 per dollar.
Industrial production contracted 3.2 percent in February from a year earlier, after growing a revised 5.5 percent in the prior month, Brazil’s statistics agency reported today. The median forecast of 25 analysts surveyed by Bloomberg was for output to shrink 2.4 percent.
The Bovespa (IBOV) has retreated 12 percent from this year’s high on Jan. 3 amid concern accelerating inflation may curb Brazil’s economic recovery and the government’s interventionist policies will hurt profits in industries including utilities and energy. The MSCI BRIC Index (MXBRIC) of shares in Brazil, Russia, India and China has lost 7 percent over the same period.
Brazil’s benchmark equity gauge trades at 11.1 times analysts’ earnings estimates for the next four quarters, compared with 10.6 for the MSCI Emerging Markets Index (MXEF) of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume for stocks in Sao Paulo was 4.9 billion reais ($2.42 billion) yesterday, which compares with a daily average of 7.52 billion reais this year through March 28, according to data compiled by the exchange.
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