Brazilian Stocks Post Longest Advance in Month on Rousseff's Winby
Lawmakers upheld vetoes of law that would have raised expenses
Steelmakers rallied on report Brazil to raise steel import tax
The Ibovespa posted the longest rally in a month as a Congressional vote that backed President Dilma Rousseff’s clampdown on spending fueled optimism the government will be able to shore up Brazil’s finances.
The country’s benchmark equity index added 0.4 percent to 47,435.58 at the close of trading in Sao Paulo, gaining for a third day, after lawmakers upheld presidential vetoes of legislation that would have granted salary increases to judicial workers and tax breaks for teachers. Usinas Siderurgicas de Minas Gerais SA surged 15 percent, the most in two years, as steelmakers rallied after newspaper Folha de S.Paulo reported that the government is studying an increase to import tariffs on the metal.
Rousseff’s government has said shoring up the country’s fiscal health is necessary to pull the country out of its deepest recession in 25 years and ward off further cuts to its credit rating. Criticism of the measures have fed a political crisis that pushed Rousseff to the cusp of impeachment and threatened Finance Minister Joaquim Levy’s post.
"The fact that the vetoes were upheld shows that the government is strengthening, and that’s a relief for investors," Lauro Vilares, an analyst at the brokerage Guide Investimentos, said from Sao Paulo. "Besides that, the news regarding a possible import tax for steel is also boosting steelmakers and helping to propel the index."
Still, the gauge traded at 11.1 times estimated earnings, or 18 percent below the MSCI Emerging Markets Latin America Index.
State-controlled oil producer Petroleo Brasileiro SA, known as Petrobras, rose with crude prices. Food company BRF SA was the worst performer on an MSCI gauge of consumer staples stocks.