Brazil shares end lower after U.S. inflation news
Reuters, Friday, May 14, 1999 at 19:37
SAO PAULO, May 14 (Reuters) - Brazilian shares ended 1
percent lower on Friday as concerns over U.S. inflation data
undermined optimism that Brazil's economy was on the road to
recovery, traders said.
Even with the drop, Sao Paulo's key Bovespa index (INDEX:$BVSP.X)
ended at 12,335 points this week, up 0.8 percent after foreign
investors poured money into the bourse in the first few
sessions, enthusiastic that the worst of Brazil's currency
crisis had passed.
Shares dipped on Friday after the U.S. Labor Department
reported that the Consumer Price Index (CPI) rose 0.7 percent
in April in the sharpest monthly gain since October 1990.
"With the CPI results, everyone is worried about
profit-taking in the United States and the reactions that could
provoke here," Carlos Hokama, a fund manager at Banco
Credibanco said.
The price data could prompt the Federal Reserve to raise
U.S. interest rates at next week's Federal Open Market
Committee (FOMC) policy meeting, or shortly thereafter. Higher
U.S. rates would make returns in riskier emerging markets less
attractive.
Still, Brazilian stocks cut some losses in afternoon trade
amid hopes that the Central Bank will continue cutting rates at
home despite the bit of negative news from abroad.
"There were rumors that there could even be another rates
cut today," Hokama said.
The Central Bank's Monetary Policy Committee (Copom) is
expected to trim rates when it meets next week, in what would
mark the eighth cut since the currency crisis hit in
mid-January. The government has lowered rates amid signs of
slowing inflation and economic recovery.
Turnover was lower than in recent sessions with 658 million
reais trading hands, compared with daily volume of close to 1
billion reais earlier this week.
Telebras preferred receipts (SAO:RCTB41) led blue-chip
stocks lower, closing down 1.3 percent at 168.01 reais.
Electric utility Empresa Bandeirante de Energia Eletrica
(SAO:EBEN4) bucked the market's trend, jumping 6.7 percent to
end at 11 reais after announcing a first-quarter loss of 170.3
million reais, largely because of the devaluation.
Copyright 1999, Reuters News Service
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