The Ibovespa rose the most among the world’s biggest equity benchmarks after the Federal Reserve unexpectedly maintained the pace of a U.S. stimulus program that has boosted demand for emerging-market assets.
Brazilian homebuilders including Rossi Residencial SA and Gafisa SA rallied as traders pared bets for higher borrowing costs in Latin America’s largest economy. Steelmaker Usinas Siderurgicas de Minas Gerais SA jumped the most in a month as commodities rallied.
The Ibovespa rose 2.6 percent to 55,702.90 at the close in Sao Paulo after earlier falling as much as 0.5 percent. It was the best performance among 94 stock gauges tracked by Bloomberg globally, followed by Argentina’s Merval and Mexico’s IPC. The real jumped 2.9 percent to 2.1920 per dollar at 5:17 p.m. local time. Commodities rose as the Fed refrained from reducing the $85 billion pace of monthly bond buying, saying it needs more evidence of improvement in the economy.
“The Fed’s decision means that liquidity will remain high in global markets, which is positive for the Ibovespa and the real,” Fausto Gouveia, who helps manage about 440 million reais of assets at Legan Administracao, said in a phone interview from Sao Paulo. “Most people were expecting that the Fed would announce a reduction in the bond-buying program. Since that didn’t happen, there’s a short-term correction.”
Economists surveyed by Bloomberg had forecast the Federal Open Market Committee would dial down monthly Treasury purchases by $5 billion, to $40 billion, while maintaining its buying of mortgage-backed securities at $40 billion. There needs to be a “substantial improvement in outlook for labor market” before the Fed starts scaling back monetary stimulus, Chairman Ben S. Bernanke said at a press conference in Washington after the FOMC meeting.
“From the standpoint of emerging markets, it’s very bullish that the taper was postponed,” Walter “Bucky” Hellwig, who helps manage $17 billion at B&T Wealth Management in Birmingham, Alabama, said in a telephone interview. “It does provide liquidity to those markets.”
Rossi advanced 8.6 percent to 3.29 reais. Gafisa rose 6.2 percent to 3.80 reais. The BM&FBovespa Real Estate Index, which today advanced 3.4 percent, has tumbled 13 percent this year as Brazil’s central bank increased the benchmark lending rate by a total of 1.75 percentage points to 9 percent, the highest in Latin America, in an attempt to curb inflation.
The real extended to 11 percent its advance since Aug. 22, when Brazil’s central bank announced a $60 billion intervention program of currency swaps and foreign-exchange credit lines through December. Usiminas, as Usinas Siderurgicas de Minas Gerais is known, climbed 2.9 percent to 10.65 reais today.
The Standard & Poor’s GSCI Index of 24 raw materials rose 1.5 percent. The Bloomberg Base Metals 3-Month Price Commodity Index gained 1.2 percent. Commodity producers account for about 39 percent of the Ibovespa’s weighting.
Cia. Energetica de Minas Gerais fell 1 percent to 18.45 reais, and earlier tumbled as much as 4 percent, after O Estado de S.Paulo reported that Brazil plans to demand that electricity distributors with licenses expiring between 2015 and 2017 boost investment and meet targets for service quality when applying for a renewal. The newspaper cited an unidentified aide to President Dilma Rousseff.
Rousseff’s press office didn’t respond to a request from Bloomberg News seeking comment. The Mines and Energy Ministry said in a statement that the subject is being reviewed and no decision has been made yet.
The Ibovespa entered a bull market on Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 17 percent in dollar terms this year, compared with a decline of 4.4 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.
Trading volume of stocks in Sao Paulo was 6.33 billion reais yesterday, compared with a daily average of 7.74 billion reais this year through Sept. 13, according to data compiled by the exchange.