Ibovespa Rises as Brazilian Rate Outlook Bolsters B2W

The Ibovespa rallied to a one-week high as companies that depend on domestic demand gained amid speculation that policy makers will limit increases in Brazil’s target lending rate.

B2W Cia. Digital led gains by retailers. Banco do Brasil SA was the best performer among financial stocks. Toll-road operator Cia. de Concessoes Rodoviarias rose the most in two weeks. Railroad company ALL America Latina Logistica SA (ALLL3) advanced after posting first-quarter earnings that beat analysts’ estimates.

Brazil’s benchmark equity gauge added 0.7 percent to 55,795.64 at 12:01 p.m. in Sao Paulo. Forty-one stocks advanced on the measure while 24 fell. The real weakened 0.1 percent to 2.0111 per dollar. Swap rates on the contract due in January 2015 dropped 0.07 percentage point to 8.17 percent before a report tomorrow that is forecast to show annual inflation slowed in April.

“The latest inflation figures weren’t so bad,” Luis Gustavo Pereira, an analyst at Futura Corretora in Sao Paulo, said in a telephone interview. “It doesn’t look like we’re going to see increases steep enough to have a negative impact on equities.”

The central bank board voted 6-to-2 last month to increase the benchmark Selic rate to 7.50 percent from a record low 7.25 percent, saying in its statement that the “resilience of inflation” required action.

B2W, Banco do Brasil

B2W added 0.9 percent to 11.49 reais. Banco do Brasil climbed 3 percent to 25.09 reais. CCR rose 2.6 percent to 20.31 reais.

ALL rose 1.3 percent to 10.49 reais. The company posted adjusted net income of 33.9 million reais in the first quarter, more than the 24.6 million reais average of three estimates among analysts surveyed by Bloomberg.

The Ibovespa has retreated 12 percent from this year’s peak 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 of shares in Brazil, Russia, India and China has lost 4.3 percent over the same period.

Brazil’s main equity gauge trades at 12.4 times analysts’ earnings estimates for the next four quarters, compared with 10.7 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume for stocks in Sao Paulo was 7.65 billion reais yesterday, which compares with a daily average of 7.71 billion reais this year through April 30, according to data compiled by 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 at papadopoulos@bloomberg.net

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