Ibovespa Rises to 18-Month High as Stimulus Outweighs Valuations

The Ibovespa rose to the highest level in 18 months as speculation the U.S. central bank will keep stimulating the economy outweighed concern Brazilian stocks were too expensive.

Cosmetics seller Natura Cosmeticos SA jumped the most on the gauge. Meatpacker Marfrig Global Foods SA gained a third day. Steelmaker Cia. Siderurgica Nacional SA was the worst performer on the MSCI Brazil/Materials index as a Chinese manufacturing gauge fell more than analysts predicted.

The Ibovespa rose 0.2 percent to 58,992.11 at the close of trading in Sao Paulo, gaining for a sixth day. The gauge traded at 11.5 times estimated earnings, the highest valuation since November, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index climbed to a record a day after minutes from the Federal Reserve’s last meeting reinforced the commitment to supporting the recovery.

“The outlook for the global economy is still very positive, and that’s very positive for equities,” Rogerio Freitas, a partner at hedge fund Teorica Investimentos, said in a phone interview from Rio de Janeiro. “The only thing stopping stocks from gaining further today is that, after such a long rally, some people opt to take some profits.”

While a report today showed fewer Americans than forecast applied for unemployment benefits last week, Fed Chair Janet Yellen has highlighted uneven progress in the labor market, which could call for further accommodation.

Natura advanced 3.8 percent to 42.64 reais. Marfrig jumped 3.8 percent to 6.59 reais. CSN, as Cia. Siderurgica is known, fell 2.5 percent to 10.52 reais.

The Ibovespa has gained 31 percent from this year’s low on March 14, the most in the span among major stock markets, as state-run companies jumped on speculation that President Dilma Rousseff will lose her re-election bid.

Trading volume of equities in Sao Paulo was 6.68 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 6.57 billion reais this year, according to the exchange.

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