The Ibovespa rose on speculation that a two-day drop that pushed the Brazilian stock gauge to a one-month low was excessive as the nomination of Janet Yellen to lead the U.S. Federal Reserve boosted demand for riskier assets.
Homebuilder Direcional Engenharia SA (DIRR3) gained after saying third-quarter contracted sales increased 15 percent from a year earlier. MMX Mineracao e Metalicos SA, the iron-ore producer controlled by former billionaire Eike Batista, was the best performer on the gauge after slumping 40 percent in seven-day streak of losses.
The Ibovespa advanced 0.3 percent to 52,481.69 at 10:40 a.m. in Sao Paulo, with 42 stocks rising and 27 falling. The benchmark gauge sank 1 percent in the previous two sessions. The real strengthened 0.4 percent to 2.2023 per dollar today.
“What’s pushing the Ibovespa higher today is the news that Yellen will be the new head of the Fed,” Luis Gustavo Pereira, a strategist at Futura Corretora brokerage, said in a phone interview from Sao Paulo. “She’s seen as someone who advocates for monetary stimulus, which is positive for equities. After recent losses, some stocks are rebounding today on the back of this news.”
President Barack Obama will nominate Yellen, the current Fed vice chairman and an architect of its stimulus program, to succeed Ben S. Bernanke as chairman, according to a White House official. Yellen supported the central bank’s bond-buying programs that have boosted demand for assets including emerging-market stocks.
MMX jumped 2.9 percent to 1.05 reais. Direcional climbed 0.2 percent to 11.87 reais.
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