Brazil Stocks Rise From Two-Week Low as Vale Joins Mining Rally

Updated on
  • Metals gain on speculation China to increase its stockpiles
  • Brexit, Fed angst has weighed on Ibovespa in recent days

Brazil Is Unraveling Before Our Eyes

The Ibovespa rebounded from its lowest level in two weeks as speculation that China is planning to increase its stockpiles of base metals lifted miner Vale SA, the world’s biggest producer of iron ore, and steelmakers including Gerdau SA.

Vale, whose main export market is the Asian country, was among the biggest contributors to the Ibovespa’s advance, following a global rally in the industry. A gauge of Brazilian materials producers climbed the most in a week as the Bloomberg Base Metals Three-Month Price Index advanced 1.7 percent.

The improved prospects for a sector that accounts for almost half of Brazil’s exports provided some relief Wednesday to investors on the local market amid concern the U.K. could be headed for an exit from the European Union. Investors will also look to a Federal Reserve announcement for clues to the likely timing of the next interest-rate increase.

"The mood is more positive everywhere today because of the good news from China," said Alvaro Bandeira, the chief economist at the brokerage Modalmais in from Rio de Janeiro. "Beijing always acts to correct any imbalance of its economy and markets, and that benefits Brazilian assets."

The Ibovespa rose 0.6 percent to 48,961.06 at 2:02 p.m. in Sao Paulo as 39 of its 59 stocks gained. Vale added 3.4 percent and Gerdau, analysts’ favorite Brazilian steelmaker, climbed 2.8 percent.

Rival Usinas Siderurgicas de Minas Gerais SA, known as Usiminas, was the best performer on Brazil’s benchmark equity gauge, advancing 13 percent, after saying it renegotiated loans with the country’s biggest banks, according to Vitor Suzaki, an analyst at brokerage Lerosa Investimentos. The company is getting a three-year grace period and will be allowed to payback the debt in 10 years.

Clothing retailer Lojas Renner SA added as much as 2.6 percent after JPMorgan Chase & Co. increased the 12-month target price of the company by 15 percent.

Trading volume of stocks on the Ibovespa was 7.8 percent higher than the 30-day average for this time of day, according to data compiled by Bloomberg. The index is trading at 11.3 times estimated earnings, below this year’s average ratio of 11.7.