The Bovespa index gained the most in three weeks as speculation Brazilian policy makers will further reduce borrowing costs lifted companies selling domestically.
Vale SA, the world’s largest iron-ore producer, contributed the most to the benchmark’s gain as the price of the steelmaking material rose in China. Online retailer B2W Cia. Global do Varejo rebounded from a one-week low, and its parent Lojas Americanas SA climbed for a sixth day. Health insurer Amil Participacoes SA surged after U.S.-based UnitedHealth Group Inc. agreed to pay $4.9 billion for a 90 percent stake.
The Bovespa advanced 1.3 percent to 59,317.15 at the close of trading in Sao Paulo, the most since September 13. Fifty-one stocks rose on the gauge while 14 fell. The real was little changed at 2.0297 per dollar at 5:44 p.m. local time.
“The government is pouring a lot of stimulus into the economy to boost consumption so stocks that benefit from that, such as consumer stocks and retailers, tend to outperform,” Marcos Pessoa, an economist at Renascenca brokerage, said by phone from Sao Paulo. “There’s a policy meeting this week, and we don’t rule out another rate cut.”
Brazil’s central bank will lower the benchmark Selic by 0.25 percentage point this week from a record low 7.5 percent at its two-day monetary policy meeting beginning tomorrow, trading in swap rates shows.
B2W gained 3.5 percent to 11.45 reais. Lojas Americanas added 3.8 percent to 17.60 reais, a record high. Hypermarcas SA, which makes more than 190 consumer products, advanced 2.3 percent to 15.95 reais.
Amil jumped 15 percent to 29.16 reais. The deal with UnitedHealth values the Brazilian company at 30.75 reais a share, Donald Nathan, a spokesman for the Minnesota-based insurer, said in an e-mail message.
Vale rose 2.9 percent to 36.01 reais, following an advance in iron-ore swaps as buyers in China returned after last week’s holidays. MMX Mineracao e Metalicos SA gained 6.7 percent to 4.61 reais, the most since July 27.
State-controlled lender Banco do Brasil SA, Latin America’s biggest bank by assets, slumped 3 percent to 22.80 reais, the biggest drop on the Bovespa, after saying it lowered fees it charges on some services by as much as 34 percent. President Dilma Rousseff is stepping up pressure on banks to cut reduce borrowing costs as part of an effort to boost Brazil’s recovery.
“We’ve seen the government intervening in the economy more often, which makes investors a little worried about how far it will go to reach its goals,” Fernando Goes, an analyst at Clear Corretora brokerage, said by phone from Sao Paulo. “That’s the case with the financial sector. All the pressure for lower interest rates and fees will probably affect earnings.”
The Bovespa has climbed 13 percent from this year’s low on June 5 as stimulus from central banks around the world eased economic concern and borrowing costs at a record low in Brazil boosted stock demand. The index trades at 13.5 times analysts’ earnings estimates for the next four quarters, which compares with the ratio of 11.2 times for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume was 5.78 billion reais ($2.85 billion) in stocks in Sao Paulo today, according to data compiled by Bloomberg. That compares with a daily average of 7.3 billion reais this year through Oct. 4, data compiled by the exchange show.