The Ibovespa rose the most in three months, snapping four days of losses as MRV Engenharia & Participacoes SA led a rally in Brazilian homebuilders and commodity exporters surged.
Steelmaker Cia. Siderurgica Nacional SA climbed the most since November, while Usinas Siderurgicas de Minas Gerais SA rebounded after six days of losses. Iron-ore producer Vale SA contributed the most to the benchmark’s advance as prices for the raw material increased for the first time in more than a week. Cia. Hering led retailers lower after retail sales rose less than forecast in April.
The Ibovespa gained 2.5 percent to 50,414.89 at the close of trading in Sao Paulo with 53 of its 71 member stocks gaining. The advance was the biggest since March 6, and pared this year’s decline to 17 percent. The real strengthened 1.7 percent to 2.1212 per dollar today, rebounding from a four-year low after the government removed a 1 percent tax charged on bets against the dollar in the futures market.
The tax elimination and other measures Brazil has implemented are “fueling optimism” that the government may become more aggressive in its effort to spur growth and stem inflation, according to Ricardo Pinto Nogueira, the head of operations at Sao Paulo-based brokerage firm Souza Barros. “After the recent decline, there also are good stocks whose prices seem attractive now,” he said in a phone interview.
The Ibovespa has slumped 20 percent from this year’s peak on Jan. 3 on speculation accelerating inflation may curb Brazil’s economic recovery and the government’s interventionist policies will hurt profits in industries including utilities and energy.
MRV gained 12 percent to 7.08 reais today, paring its loss since Jan. 3 to 40 percent. The homebuilder was the best performer on the BM&F Bovespa Real Estate Index, which added 2.8 percent. Gafisa SA gained 7.2 percent to 3.58 reais, the steepest advance in two months.
Homebuilders gained amid speculation a strengthening real will ease Brazil’s inflation, Nogueira said. The pace of annual price increases was 6.50 percent in May, the upper end of the central bank’s target range.
CSN, as Siderurgica Nacional is also known, climbed 8.2 percent to 6.35 reais as the MSCI Brazil/Materials Index advanced the most among 10 industry groups. Usiminas jumped 8.8 percent to 8.45 reais.
Vale gained 4.6 percent to 28.65 reais. Iron ore delivered at the Tianjin port in China rose 1 percent to $112 a dry metric ton today, the first increase since June 4, according to prices from The Steel Index Ltd.
Hering lost 2.9 percent to 34.45 reais. Brazilian retail sales rose 0.5 percent in April from the previous month, after revised numbers showed they were unchanged in March, the national statistics agency said today in Rio de Janeiro. The increase was less than forecast by 26 of 28 economists surveyed by Bloomberg, whose median estimate was for growth of 1.2 percent.
Power utility Cia. Paranaense de Energia advanced 5.7 percent to 34.03 reais after saying in a regulatory filing that it didn’t make an offer for bankrupt Rede Empresas de Energia Eletrica SA’s assets.
The Ibovespa trades at 12.1 times analysts’ earnings estimates for the next four quarters, compared with a multiple of 10 for the MSCI Emerging Markets Index of 21 developing nations’ equities.
Trading volume for stocks in Sao Paulo was 8.17 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.9 billion reais this year through June 12, according to data compiled by the exchange.