Ibovespa at Highest Since 2014 on Commodities, Economic Outlook

  • Raw-materials producers are best performers on equity index
  • Natura, Pao de Acucar advance most among consumer stocks

The Ibovespa rose to its highest level in almost two years as an advance in crude oil lifted the shares of Petroleo Brasileiro SA while estimates for a faster economic recovery fueled bets on companies that rely on domestic demand.

Cosmetics maker Natura SA and retailer Cia. Brasileira de Distribuicao, known as Pao de Acucar, were the best performers on a gauge of consumer stocks. Petrobras, as the state-run oil producer is known, contributed the most to Ibovespa’s gain. Miner Vale SA followed metals prices higher. Power utility CPFL Energia SA rose to the highest price since 2012 after State Grid Corp. of China reached a deal to take control of the company, according to people with knowledge of the matter.

Improved prospects for exports and increased confidence in Acting President Michel Temer’s ability to shore up Brazil’s finances have prompted analysts to raise their gross domestic product forecasts for Latin America’s biggest economy this year and next. Speculation that the economy will soon rebound has helped fuel gains of 36 percent for the Ibovespa in 2016.

"The fact that stocks are holding at a high level shows consistency in the optimism," Paulo Henrique Amantea, an analyst at the brokerage Guide Investimentos, said from Belo Horizonte, Brazil. "Local and foreign investors are very interested in increasing their positions in stocks."

The Ibovespa added 1.5 percent to 59,145.98 at the close of trading in Sao Paulo as 45 of its 59 stocks gained. Companies related to the raw-material industry were seven out of the 10 best-performers on the index. Natura added 2 percent, and Pao de Acucar rose 1.6 percent. Petrobras climbed 4.4, and Vale advanced 3.1 percent. CPFL gained 2.3 percent. Petrochemicals maker Braskem SA also rallied after second-quarter results beat forecasts.

On Monday, Credit Suisse Group AG cut its estimates for the recession in 2016 to 3 percent from 3.5 percent. It also raised the projection for growth next year to 0.8 percent from 0.5 percent, citing "the expectation of a more positive scenario for the Brazilian economy in the next few years."

Before it's here, it's on the Bloomberg Terminal.