The Bovespa index advanced for a third day as retailer Lojas Americanas SA led gains by companies that sell on credit amid speculation that Brazilian policy makers will delay raising record low interest rates.
Airline Gol Linhas Aereas Inteligentes SA rose after saying its frequent-flier unit Smiles filed a request with securities regulators to sell shares in an initial public offering. Paranapanema SA, Brazil’s biggest copper smelter, surged after reporting its first profit in five quarters.
The Bovespa rose 0.3 percent to 57,424.29 at the close of trading in Sao Paulo, paring this month’s decline to 3.9 percent. The gauge has dropped 5.8 percent in 2013, the worst start to a year since 2003, amid concern that accelerating inflation may curb Brazil’s economic recovery and that the government’s interventionist policies will hurt profits in industries including utilities and energy.
“Economic data seem to support a view that the central bank won’t come up with a big rate increase and instead will opt for a gradual adjustment, which wouldn’t be so bad for equities,” Otavio Vieira, who helps manage 270 million reais as a partner at hedge fund Fides Asset Management, said by phone from Rio de Janeiro. “The prospects of a huge rate increase scared away some investors in the past few weeks, and maybe this will change in the coming months.”
Swap rates on most contracts fell, indicating reduced bets on an interest-rate increase, after a report showed a decline in Brazil’s services confidence index. The gauge fell 2.7 percent in February from a month earlier to 122.1, the Getulio Vargas Foundation said. The real depreciated 0.3 percent to 1.9785 per U.S. dollar.
Lojas Americanas’s voting shares advanced 7.8 percent to 17.20 reais in the best performance on the MSCI Brazil/Consumer Discretionary Index, which rose to a two week high.
Gol climbed 3.6 percent to 12.57 reais.
Vale SA, the world’s biggest iron-ore producer, gained 3.1 percent to 36.55 reais after earlier falling as much as 2 percent. Chief Executive Officer Murilo Ferreira said today that the company is poised to benefit from a price recovery and a balance-sheet cleanup that spurred a record quarterly loss.
Vale yesterday posted a fourth-quarter net loss of $2.65 billion after writing down the value of some nickel, coal and steel assets, compared with a year-earlier profit of $4.67 billion.
“We have great confidence that these negative numbers that you see today will become strongly positive,” Ferreira told analysts on a conference call.
Paranapanema surged 8.7 percent to 5.25 reais, the best performer on the BM&FBovespa Small Cap index, which added 0.7 percent. The company said in a regulatory filing today that net income was 40.8 million reais in the fourth quarter, which compares with a net loss of 61.2 million reais one year earlier.
Autometal SA, the Brazilian unit of Spanish auto-parts maker Cie Automotive SA, fell 5.8 percent to 20.49 reais after posting earnings that missed analysts’ forecasts.
Eighteen of 28 companies on the Bovespa index that have already reported fourth-quarter earnings trailed analysts’ estimates, according to data compiled by Bloomberg.
Oil producers Petroleo Brasileiro SA and OGX Petroleo & Gas Participacoes SA were the main decliners on the Bovespa, falling at least 1.2 percent as crude fell to the lowest level this year.
Brazil’s benchmark equity gauge trades at 11.7 times analysts’ earnings estimates for the next four quarters, compared with 10.5 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume for stocks in Sao Paulo was 8.8 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.53 billion reais this year through Feb. 26, according to data compiled by the exchange.