The Ibovespa climbed the most in two weeks with Brookfield Incorporacoes SA leading gains among homebuilders as concern eased that less monetary stimulus in the U.S. will curb demand for Brazilian stocks.
Electricity utility Eletropaulo Metropolitana SA gained the most since 2008 after saying it plans to appeal orders to pay back clients who regulators found were overcharged. Brewer Ambev SA rose after Banco Santander SA raised it to buy. Steelmaker Usinas Siderurgicas de Minas Gerais SA was the best performer on the MSCI Brazil/Materials Index.
The Ibovespa increased 0.9 percent to 50,563.43 at the close in Sao Paulo, the biggest one-day gain since Dec. 5. After trading in Brazilian stocks ended for the day, the Federal Reserve said it’s cutting monthly bond purchases to $75 billion from $85 billion, citing an improvement in the U.S. labor market.
“It’s not normal to have governments injecting huge amounts of liquidity in the markets, and at some point this would have to change,” Rogerio Freitas, a partner at Teorica Investimentos, said by phone from Rio de Janeiro. “The Fed did its job reigniting the U.S. economy, which seems to be getting stronger. And with the world economy strengthening, Brazil will follow.”
The Fed’s purchases will be divided between $40 billion in Treasuries and $35 billion in mortgage bonds starting in January, down from $45 billion and $40 billion respectively, according to a statement from the Federal Open Market Committee following the conclusion of its two-day meeting in Washington.
The real weakened 0.2 percent to 2.3255 per U.S. dollar at 5:25 p.m. local time, paring an earlier drop of as much as 1.7 percent after the Fed’s decision was announced.
Usiminas, as Usinas de Minas Gerais is known, added 5 percent to 13.91 reais. Ambev increased 1.2 percent to 16.70 reais.
Gafisa jumped 6.3 percent to 3.72 reais. The BM&FBovespa Real Estate Index advanced 0.5 percent.
Eletropaulo surged 17 percent to 11.25 reais. The company said in a filing after the market closed yesterday that it will take legal action to nullify an order from Brazil’s power regulator to reimburse consumers for 626 million reais in charges through discounts on their bills over the next four years.
The penalty would reduce Eletropaulo’s earnings before interest, taxes, depreciation and amortization by 15 percent each year, Banco Santander SA’s analyst Maria Carolina Carneiro wrote in a note to clients.
The Ibovespa has dropped 27 percent in dollar terms this year, the worst performance among the 20 biggest equity indexes tracked by Bloomberg, on concern Brazil’s economic recovery will falter and reduced monetary stimulus in the U.S. will curb demand for emerging-market assets.
Trading volume of stocks in Sao Paulo was 6.5 billion reais today, data compiled by Bloomberg show. That compares with a daily average of 7.45 billion reais this year, according to the latest data available from the exchange.