Brazil Stocks Climb as Commodity Producers Offset Forecasts Cut

Updated on
  • Banco do Brasil leads gains after announcing branch closures
  • Raw materials producers account for 27% of Ibovespa index

The Ibovespa rose as commodity producers advanced amid speculation that oil exporters will agree to output cuts.

Petroleo Brasileiro SA contributed the most to the advance. Crude rose 3.9 percent in New York after Iran said it was “highly probable” that the Organization of Petroleum Exporting Countries would agree to cut production when they meet in Vienna next week. Banco do Brasil SA jumped after saying it will close 402 branches and ask employees to take voluntary retirement packages in an overhaul aimed at saving 750 million reais ($222 million) annually.

As the Brazilian government struggles to shore up public finances and restore growth, companies that sell raw materials have benefited from a recovery in oil and metal prices. Accounting for 27 percent of the Ibovespa’s weighting, commodity producers will support the stock market in the very short term while the local economy remains weak, according to Jason Vieira, chief economist at Infinity Asset Management.

"Commodities are driving the stocks gauge up," Vieira said from Sao Paulo. "They should push the improvement in Brazilian assets for now, amid worsening economic forecasts in Brazil and lingering uncertainties worldwide after the U.S. elections."

Steelmakers Cia. Siderurgica Nacional SA, Usinas Siderurgicas de Minas Gerais SA and Gerdau SA rose as metals rebounded from last week’s losses.

The Ibovespa added 1.8 percent to 61,070.27 on Monday as 45 of its 58 stocks advanced. Petrobras climbed 7.3 percent. Vale SA added 5.5 percent. Banco do Brasil surged 7.8 percent, the most in more than seven months

— With assistance by Aline Oyamada

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