The Ibovespa (IBOV) rose the most among major global benchmarks and the real gained on speculation voter polls following Brazil’s World Cup rout will show reduced support for President Dilma Rousseff as economic growth stalls.
Petroleo Brasileiro SA contributed the most to the Brazilian stock index’s increase as investors bet that a change in government would reduce intervention in the state-run oil company. Embraer SA rallied to a six-year high after reporting an increase in jet deliveries. Vale SA followed iron ore higher.
The Ibovespa added 1.7 percent to 55,743.98 at the close of trading in Sao Paulo, its highest level since Oct. 22. The real climbed 0.4 percent to 2.2122 per dollar for the biggest increase among 16 major currencies tracked by Bloomberg.
“There are rumors in the market that a new election poll to be released this week will show rising support for Rousseff’s rivals as Brazil’s defeat in the World Cup left citizens unhappy,” Luis Morato, a senior trader at TOV Corretora, said by telephone from Sao Paulo.
The Ibovespa entered a bull market on May 7, surging 20 percent from this year’s low, as Petrobras rallied amid polls showing declining support for Rousseff before October elections. The oil company rose 4.5 percent to 19.10 reais today, its highest since Nov. 29.
Goldman Sachs Group Inc. analysts including Felipe Mattar wrote in a research note to clients that Petrobras is their top Latin American energy pick.
“Newsflow around the publication of federal election polls should continue to have an impact on Petrobras shares, as witnessed since the first quarter,” the analysts wrote.
A Datafolha poll conducted July 1-2 before Brazil’s 7-1 defeat to Germany in a World Cup semifinal last week indicated that Rousseff’s support jumped four percentage points to 38 percent following three straight drops this year. The poll of 2,857 people had a margin of error of 2 percentage points.
Speculation that Rousseff, who has overseen the slowest growth of any Brazilian president in two decades, is declining in popularity has helped push the real up 6.8 percent this year, the most among 24 emerging-market currencies.
“Elections are going to be the main focus for investors now, and the real usually advances when Rousseff declines in polls,” Joao Paulo de Gracia Correa, a foreign-exchange trader at Correparti Corretora de Cambio in Curitiba, Brazil, said in a telephone interview.
Embraer gained 3.3 percent to 22.07 reais, the highest level since October 2007. The plane maker said in a statement that it delivered 58 jets in the second quarter, compared with 51 a year earlier. It also forecast delivering 6,250 jets with 70 to 130 seats in the next 20 years.
Swap rates, a gauge of expectations for interest-rate moves, declined six basis points, or 0.06 percentage point, to 11.40 percent on the contract maturing in January 2017 on diminished economic prospects.
Analysts surveyed by the central bank reduced their growth forecast for this year to 1.05 percent from 1.07 percent a week earlier, according to the median of about 100 estimates compiled for a central bank survey published today.
Economic growth will be 1.3 percent this year, down from 2.5 percent in 2013, according to a Bloomberg survey of 33 analysts. Annual inflation in June breached the 6.5 percent ceiling of the government’s target range.
A slowing economy spurred the central bank to hold its target lending rate at 11 percent on May 28 after nine consecutive increases to curb inflation. Policy makers next decide on borrowing costs July 16.
Trading volume of stocks in Sao Paulo was 8.92 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 6.46 billion reais this year, according to data from the exchange.
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