Ibovespa Joins Global Rally as Commodity Gain Buoys Steelmakers

Finding Opportunity in Emerging Markets
  • CSN rallies most in one month; Usiminas, Gerdau also rise
  • Ibovespa benchmack caps fourth straight weekly decline

Brazilian stocks gained, trimming a fourth straight weekly decline, as a rally in commodities provided the country’s raw-materials producers some relief.

Steelmaker Cia. Siderurgica Nacional SA jumped the most in a month, with competitors Gerdau SA and Usinas Siderurgicas de Minas Gerais SA also closing higher. Sugar-cane processor Cosan SA Industria e Comercio rose the most in six weeks.

Stocks gained worldwide on Friday amid increased investor confidence that central banks will act to support markets after this month’s rout. Brazilian equities approached a six-year low on Wednesday amid fears that China’s slowdown would curb demand for its exports. Brazil is facing its worst recession in more than a century, with above-target inflation and a political crisis fueled by a corruption scandal.

"Gains in commodities are always good news for Brazil’s market," Ari Santos, a trader at the brokerage H.Commcor, said from Sao Paulo. "The mood is better today, and investors are finding some good opportunities after the recent decline."

The Ibovespa climbed 0.8 percent to 38,031.22 at the close of trading in Sao Paulo as 39 of its 61 stocks rose. The equity gauge lost 1.4 percent this week. CSN advanced 3.9 percent to 3.45 reais, and Usiminas and Gerdau gained 2 percent and 0.3 percent respectively.

The Standard & Poor’s GSCI index of commodities rose 4 percent, the most since October. West Texas Intermediate crude for February delivery climbed 8.4 percent to $32.01 a barrel. Commodity producers account for about 20 percent of Ibovespa’s weighting.

Global sentiment improved after European Central Bank President Mario Draghi indicated policy makers may add stimulus to the economy. Draghi signaled that he’ll do what’s needed to reignite consumer prices.

“We’ve plenty of instruments,” the ECB president said on Friday at the World Economic Forum in Switzerland. “We have the determination and the willingness and the capacity of the Governing Council to act and deploy these instruments.”

In Brazil, companies that depend on domestic demand also gained after inflation decelerated. The IPCA index showed prices rose 0.92 percent this month through Jan. 15, according to the national bureau of statistics. That’s in line with estimates and less than the 1.18 percent rise in December. The Central Bank left its benchmark interest rate unchanged at 14.25 percent on Jan. 20 amid estimates the country will contract 2.99 percent this year.

Clothing manufacturer Cia. Hering rose 3 percent to 12.73 reais, extending a three-day gain to 4 percent.

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