The Bovespa index approached a bull market as record-low interest rates boosted Brazil’s economic outlook and stimulus measures from central banks around the world eased concern the global slowdown will deepen.
The benchmark added 2.2 percent to 63,348.53 at 10:55 a.m. in Sao Paulo, extending its advance to 21 percent from a bear-market low on June 5. Russia’s Micex index also approached a bull market today after rising more than 20 percent from a May 23 low. India entered a bull market in February, the first among the so-called BRIC countries to do so this year.
Concern about Europe’s debt crisis faded after the European Central Bank laid out a plan to purchase an unlimited amount of sovereign bonds to regain control of interest rates and fight speculation of a currency breakup. In the U.S., the Federal Reserve said yesterday it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month to boost growth and reduce unemployment.
“Interest rates at a record low in Brazil and the recently announced Fed measures to help revive the economy in the U.S. are encouraging investors to take more risk and go back to the Bovespa,” Pedro Paulo Silveira, chief analyst at brokerage Tov Corretora, said by phone from Sao Paulo. “As confidence strengthens, the Brazilian stock market seems poised to advance again.”
Brazil’s central bank, led by President Alexandre Tombini, has cut the benchmark Selic lending rate by 5 percentage points since August 2011 to 7.5 percent to spur growth in Latin America’s largest economy.
Real estate companies and commodities producers have been among the best performers on the Bovespa since the bear market low. Gafisa SA, Brazil’s sixth-biggest homebuilder by revenue, gained the most, surging 116 percent. The voting stock of steelmaker Usinas Siderurgicas de Minas Gerais SA was the third-best, rising 71 percent. Petrochemicals producer Braskem SA jumped 56 percent.