Ibovespa Gains With Real as U.S. Vote Outlook Boosts Commodities

  • Bloomberg Politics national poll shows Clinton ahead of Trump
  • Petrobras among best performers as commodities advance

What the U.S. Election Means for Emerging Markets

Brazil’s real rallied and the Ibovespa posted its biggest gain in six months as commodities prices rose and investors sought out riskier assets with one day left before the U.S. presidential election.

The real rose 0.9 percent to 3.2061 per dollar and the Ibovespa climbed 4 percent, the most since May, Monday in Sao Paulo. Oil producer Petroleo Brasileiro SA and steelmaker Usinas Siderurgicas de Minas Gerais SA were among the best performers on the stock gauge as commodities gained. The Bloomberg Commodity Index climbed 0.6 percent amid speculation that Hillary Clinton’s chances of winning the U.S. election increased after the FBI stuck to its finding that her handling of e-mails wasn’t a crime.

After rallying for most of the year, Brazilian assets were battered last week by concern that Republican candidate Donald Trump may win the vote on Tuesday, ushering in harsher trade policies that may jeopardize exporters like Brazil. The U.S. is the Latin American nation’s second-biggest trading partner. The final Bloomberg Politics national poll showed Clinton is leading by three percentage points among likely voters nationally.

"The market now is pricing in a victory of Hillary Clinton, which is lifting riskier assets," said Arnaud Masset, an analyst at Swissquote Bank SA in Gland, Switzerland.

The real’s one-week implied volatility, a measure of the cost of options to protect against declines in the currency, dropped for the first time in eight sessions, falling 1.4 percentage point to 23 percent. Volatility in Brazilian assets soared last week as polls showed the U.S. race too close to call.

"There is a certain relief rally going on with higher-yielding assets around the world," said Mauricio Oreng, a senior strategist at Rabobank in Sao Paulo.

Swap rates on the contract maturing in January 2018, a gauge of expectations for interest-rate moves, fell 0.04 percentage point to 12.16 percent.

Petrobras rose 7.6 percent, the most since June, and Usiminas added 9 percent. Vale SA shares advanced 8.2 percent after Moody’s revised the outlook for the company’s credit rating to stable from negative on Friday.

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