Brazil Stocks Rise as Government Victory Fuels Rebound Optimismby
Lenders Bradesco, Itau Contribute Most to Ibovespa’s advance
Oil giant Petrobras also advances as crude oil prices gain
The Ibovespa gained to its highest level in 14 months after Brazilian lawmakers elected an ally of Acting President Michel Temer to be speaker in the lower hours.
Buoyed by Temer’s victory in congress, investors added to bets that the government will be able to pass measures aimed at cutting the budget deficit and pulling the country out of its worst recession in a century. All but eight of the 59 stocks of the benchmark equity index advanced, led by lenders Banco Bradesco SA and Itau Unibanco Holding SA. BM&FBovespa SA, the operator of the exchange, advanced to its highest price on record.
The Ibovespa is the best performer among major global benchmarks this year on optimism that the replacement of Dilma Rousseff’s team by a more market-friendly administration will win back investors’ and companies’ confidence after Latin America’s biggest economy was cut to junk. While many measures to shore up the budget and revive activity have been announced, the vital approval by lawmakers is still pending.
"That’s really a very important victory for Temer’s plan," Alvaro Bandeira, chief economist at the brokerage Modalmais, said from Rio de Janeiro. "The trend for the market is up now."
The Ibovespa gained 1.3 percent to 55,287.15 at 10:36 a.m. in Sao Paulo, extending its winning streak to seven days, the longest since October. Bradesco added 2.8 percent, Itau climbed 1.9 percent and BM&FBovespa rose 2.8 percent. State-controlled oil producer Petroleo Brasileiro SA, known as Petrobras, followed gains in crude, rising 1.3 percent.