- Commodity producers follow global advance as materials rise
- Lenders Bradesco, Itau contribute most to Ibovespa’s gains
The Ibovespa jumped as optimism the economy is recovering faster than previously forecast added to gains driven by speculation that the U.K. will vote to stay in the European Union in a referendum this week.
Brazil’s stocks joined a global rally on Monday after polls indicated that the campaign seeking to persuade Britons to remain in the union gained momentum. Commodity producers were among the best performers on the benchmark equity index as raw materials rose. Lenders Banco Bradesco SA and Itau Unibanco Holding SA contributed the most to the gauge’s advance as analysts surveyed by the central bank pared their forecasts for the economy’s contraction for a fifth straight week.
The improvement in estimates is driven by expectations that Acting President Michel Temer will be able to push through measures to restore confidence in Latin America’s largest economy and shore up the budget balance, paving way to pull the country out of its worst recession in a century. The Ibovespa has gained 16 percent in 2016 on bets the new government will be able to put the nation back on track.
"The mood is much more positive in Brazil now with the recovery plan that the new administration is putting in place," Paulo Henrique Amantea, an analyst at the brokerage Guide Investimentos, said from Belo Horizonte, Brasil. "As the Brexit question is solved, we may see a new rally in our stocks."
The Ibovespa rose 1.6 percent to 50,329.36 on Monday as all but 10 of its 59 stocks advanced. Duratex SA, a maker of faucets and shower heads, rose the most in almost a month. The Bloomberg Commodity Index added 0.8 percent.
Bradesco and Itau both added 1.7 percent. Economists forecast Brazil’s gross domestic product will contract 3.44 percent this year after shrinking 3.8 percent in 2015. In the previous poll, the 2016 drop was seen at 3.6 percent.
In interviews to the foreign press published over the weekend, Finance Minister Henrique Meirelles said Brazil’s recovery may come sooner than many analysts expect and that some of the uncertainty over public finances is diminishing.