Brazil Stocks Gain as Petrobras’s Rally Offset Fed Rate Concern

  • Planemaker Embraer climbs after JPMorgan says buy stock
  • Investors remain cautious amid speculation of U.S. rate hike

The Slow Unraveling of Brazil, Explained in Two Minutes

Brazil’s state-run oil producer Petroleo Brasileiro SA buoyed the Ibovespa index as the stock extended a rally to an almost two-year high.

Petrobras, as the oil giant is known, was the best performer on the benchmark equity gauge as crude in the U.S. rose above $50 a barrel for the first time since June and as Brazil’s Congress voted to release the company from its obligation to be the sole operator of so-called pre-salt fields in ultra-deepwater blocks. Plane-maker Embraer SA rose after JPMorgan Chase & Co. recommended buying the stock.

The Ibovespa posted the biggest gain in the Americas on Thursday. Brazilian equities have gained 40 percent this year on speculation that a new government will push through measures to repair finances and fight the recession. Investors are also closely watching data from the U.S. to assess whether money flows that have been boosting emerging markets recently are poised to dry up.

"As markets adopt a more cautious strategy today, Petrobras is the main force pushing the Ibovespa up," Ari Santos, a stock manager at brokerage H.Commcor, said from Sao Paulo. "There’s been a lot of optimism in Brazil lately."

The Ibovespa rose 0.6 percent to 60,644.24 at the close of trading in Sao Paulo as 30 of its 58 stocks gained. Petrobras, which accounts for 10 percent of the index’s weighting, added 3.6 percent to its highest price since October 2014. Embraer climbed 2.4 percent. Four of 11 industry groups on the Ibovespa dropped, led by the technology sector, as bets mounted that the U.S. Federal Reserve will have raised rates by the end of this year.

Pulp producers Suzano Papel & Celulose SA and Fibria Celulose SA, which get most of their revenue from abroad, rose as the real weakened. Meatpacker JBS SA was the worst performer on the equity gauge. While its peers gained, steelmaker Usinas Siderurgicas de Minas Gerais SA, known as Usiminas, declined after a Brazilian court annulled the board’s recent appointment of a new chief executive officer, meaning his predecessor will be reinstated.

Maker of refractory materials Magnesita Refratarios SA surged to the highest in two and a half years after agreeing to combine operations with Austria’s RHI AG, move the merged company to the Netherlands and list the stock in London.

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