The Ibovespa rallied the most among the world’s major stock gauges as Vale SA followed metals higher amid speculation that lawmakers in Washington will reach a deal to raise the U.S. debt limit before a deadline this week.
Vale, the world’s largest iron-ore producer, contributed the most to the benchmark’s advance. Steelmaker Cia. Siderurgica Nacional SA rose to the highest since February as all 12 members of the MSCI Brazil/Materials Index gained on signs that demand is increasing in China, Brazil’s top trading partner. Consumer products maker Hypermarcas SA rallied to a two-year high after it was rated the equivalent of buy in new coverage at Credit Suisse Group AG.
The Ibovespa rose 1.9 percent to 54,170.60 at the close of trading in Sao Paulo, with 61 of its 73 member stocks higher. Trading volume was 24 percent lower than the average in the previous 30 days. The real fell 0.2 percent to 2.1811 per dollar at 5:27 p.m. local time. The Bloomberg Base Metals 3-Month Price Commodity Index added 0.5 percent after China’s customs data showed copper imports increased to an 18-month high in September.
“Data from China were positive, boosting metals and helping to lift steel and mining stocks,” Gustavo Mendonca, who helps manage 1 billion reais as an economist at Saga Capital, said by phone from Rio de Janeiro.
Vale gained 4 percent to 32.27 reais. CSN, as Siderurgica Nacional is known, advanced 4.5 percent to 11.09 reais. Hypermarcas rose 2.5 percent to 19.88 reais. The stock is the only one rated the equivalent of buy among 10 Brazilian consumer companies covered by Credit Suisse, according to a research note from analyst Tobias Stingelin.
The Ibovespa earlier dropped as much as 0.6 percent amid concern that global growth will falter if U.S. lawmakers miss a deadline to raise the country’s debt limit. The Standard & Poor’s 500 index reversed a decline of as much as 0.7 percent after the White House said that President Barack Obama and Vice President Joe Biden will meet with congressional leaders today. There has been some progress in Senate talks to resolve the impasse, Obama told reporters while visiting a charity in Washington today.
“Until U.S. politicians can agree on some kind of deal to solve this debt limit issue, there’s no way equities can post sustained gains,” Pedro Galdi, the head strategist at brokerage SLW Corretora, said by phone from Sao Paulo.
The U.S. government will exhaust its $16.7 trillion borrowing authority Oct. 17. Without legislative action, it would start missing payments sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office. The federal government has been partially shut down since Oct. 1 after Congress failed to pass a spending authorization bill for the financial year.
Braskem SA, Latin America’s largest petrochemicals producer, added 1.8 percent to 18.82 reais. The company said it is considering a venture with Styrolution Group GmbH, the biggest maker of styrene materials, to supply plastics used in household appliances and cars.
Brazil’s main equity index entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 16 percent in dollar terms this year, compared with a decline of 3.1 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.