The Ibovespa climbed the most in four weeks, led by mining company Vale SA, as metal prices gained and Brazilian policy makers refrained from stepping up the pace of increases in borrowing costs.
Klabin SA rose after the paper maker indicated it may cancel a plan to sell shares, saying in a filing that the offering will be held only if market conditions are favorable. Steelmaker Cia. Siderurgica Nacional SA led gains on the MSCI Brazil/Materials index, which jumped the most in four months.
The Ibovespa rose 2.5 percent to 46,626.26 at the close in Sao Paulo. Sixty-two of the measure’s 71 stocks advanced. The real strengthened 0.3 percent to 2.2576 per dollar at 5:27 p.m. local time. Swap rates on the contract maturing in January fell one basis point, or 0.01 percentage point, to 8.79 percent after the central bank raised the target lending rate by 50 basis points yesterday for a second straight meeting.
“The world economy is entering a new growth cycle, which favors commodities, which favors Brazil,” Rogerio Freitas, a partner at hedge fund Teorica Investimentos, said by phone from Sao Paulo. “The external outlook is very positive, as central banks around the world put investors at ease regarding their strategy for monetary stimulus.”
China may soften its stance on monetary policy, Nomura Holdings Inc. said, after Premier Li Keqiang said growth must stay above a certain level. Policy needs to remain very stimulative “for the foreseeable future” in the U.S., Federal Reserve Chairman Ben S. Bernanke said yesterday.
Vale rose 4.2 percent to 27.54 reais, contributing the most to the Ibovespa’s advance. Klabin added 1.8 percent to 10.89 reais. CSN, as Siderurgica Nacional is also known, gained 7.1 percent to 5.91 reais.
The Bloomberg Base Metals 3-Month Price Commodity Index added 1.5 percent. Commodities producers account for about 37 percent of the Ibovespa’s weighting.
Brazil’s central bank raised the target lending rate to 8.50 percent yesterday, as forecast by all 51 analysts surveyed by Bloomberg. Policy makers have increased the benchmark three times this year, lifting it by 125 basis points from a record low 7.25 percent. They raised it by a quarter-percentage point in April and 50 basis points in May.
“The total tightening cycle could be smaller than the market is pricing in,” Guilherme Loureiro, a Sao Paulo-based economist at Barclays Plc, wrote in a note to clients after yesterday’s policy meeting.
MRV Engenharia e Participacoes SA led gains by homebuilders, advancing 5.7 percent to 6.45 reais. Cyrela Brazil Realty SA Empreendimentos e Participacoes, Brazil’s biggest real estate company by sales, rose 3.8 percent to 15.95 reais. The BM&FBovespa Real Estate Index added 3.1 percent, the most since August 2012.
Online seller B2W Cia. Digital rose 3.5 percent to 9.15 reais, leading retailers higher. Parent Lojas Americanas SA climbed 1.3 percent to 15.41 reais.
Brazil’s retail sales were unchanged in May from a month earlier, the national statistics agency reported today. Analysts had forecast a drop of 0.4 percent, following a revised 0.6 percent increase in April.
The Ibovespa has slumped 24 percent this year, the worst performance among the top 20 biggest equity markets tracked by Bloomberg. Brazil’s main equity gauge trades at 11.6 times analysts’ earnings estimates for the next four quarters, compared with 10.1 for the MSCI Emerging Markets Index of 21 developing nations’ equities.
Trading volume for stocks in Sao Paulo was 7.19 billion reais yesterday, according to data compiled by Bloomberg. That compares with a daily average of 7.86 billion reais this year through July 8, according to data compiled by the exchange.