Brazilian Stocks Advance Before Congress Vote as Bradesco Climbsby
Congress to decide on changes to this year's fiscal target
Vale sinks to lowest since 2004 as iron ore declines
The Ibovespa led gains in the Americas amid speculation that the government will stay committed to measures intended to trim a budget deficit and restore growth after President Dilma Rousseff said Finance Minister Joaquim Levy will stay in his post.
Brazil’s Congress is scheduled to review presidential vetoes on measures including salary increases for judiciary employees, which if overturned could undermine Levy’s plan to cut public spending. The budget committee passed Tuesday the 2015 bill forecasting a primary deficit of 119.9 billion reais ($31.4 billion) this year.
Levy is struggling to win support for austerity measures he says are needed to shore up the country’s fiscal accounts and ward off further cuts to Brazil’s credit rating. Local media have reported several times in recent weeks that Rousseff will replace him, but the president affirmed her support for the finance minister as recently as Monday.
"Levy knows how to put the country back on track," Paulo Henrique Amantea, an analyst at brokerage H.H. Picchioni, said from Belo Horizonte, Brazil.
The benchmark Ibovespa index added 0.9 percent to 47,247.80 at the close of trading in Sao Paulo, led by lender Banco Bradesco SA. The gauge traded at 11 times estimated earnings, or 17 percent below the MSCI Emerging Markets Latin America Index.
The Ibovespa has tumbled 19 percent from its peak in May as the government struggles to shore up the budget amid forecasts for the longest recession since the 1930s. While investors seem more positive on Tuesday, volatility will continue as traders await signals of improvement before turning bullish on Brazil, according to Filipe Borges, an analyst at brokerage Solidez.
"The scenario is still discouraging," Borges said from Sao Paulo. "No negative news is good news. But for the trend to change we need more."
Vale SA, the world’s largest iron-ore miner, tumbled to the lowest level since 2004 as the raw material sank. Pulp producers Fibria Celulose SA and Suzano Papel e Celulose SA, which get most of their revenues from exports, declined as the real strengthened.