Ibovespa Advances as Confidence Grows Temer Will Shore Up Budget

  • Meatpacker JBS advances after earnings beat estimates
  • Local newspapers report Temer advancing in budget talks

The Ibovespa climbed amid renewed optimism that President Michel Temer will be able to push his economic agenda through Congress, helping to rein in a budget deficit and win back investors’ confidence.

JBS SA, the world’s largest meat producer, advanced after it reported higher-than-estimated third-quarter profit as steeper margins at its U.S. beef and pork operations helped offset poorer results at South American units. Utility AES Tiete surged as Itau BBA analysts said a rout in past sessions was unwarranted. Banco do Brasil paced gains among banks after dropping 12 percent last week. Deutsche Bank AG maintained a buy recommendation on the Brazilian lender’s stock in a report dated Friday.

Brazilian stocks have advanced 62 percent this year in dollar terms on speculation Temer’s administration will succeed in passing measures aimed at cutting budget deficits and paving the way to restore growth. Temer continues negotiations to approve a cap on spending, according to O Globo newspaper. He’ll likely send Congress a separate pension-reform bill before mid-December, Folha de S. Paulo reported. The two measures are pillars of Brazil’s fiscal adjustment plan.

"Traders feel reassured with signs that the fiscal adjustment is on track," said Vitor Suzaki, an analyst at the brokerage Lerosa Investimentos in Sao Paulo. Speculation that U.S. interest rates will rise faster than previously expected “could give Brazil’s Congress a sense of urgency to vote on important measures."

The Ibovespa climbed 1.8 percent to 60,759.32 at the close of trading in Sao Paulo. Forty of its 58 stocks rose. Itau Unibanco Holding SA contributed the most to the index’s gain, with a 4.9 percent increase. Petroleo Brasileiro SA added 5.3 percent, JBS climbed 2.8 percent and AES Tiete rose 4 percent.

The Brazilian gauge also rose along with other developing-nation indexes after a rout fueled by bets for higher U.S. interest rates and curbs on trade drove valuations to the lowest level since June. Stocks worldwide continued to rebound from a four-month low on Monday even as currencies and bonds extended losses following Donald Trump’s presidential election victory last week.

— With assistance by Andressa Lelli, and Julia Leite

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