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Financial News: BRAZIL: Ibovespa Closes Above 74,000 Points For The

BRAZIL: Ibovespa Closes Above 74,000 Points For The First Time In History

09/11/2017 - 20:29:00 (RTTNews)

(RTTNews) - Ibovespa, the benchmark stock index in Brazil, broke the 74,000-point level for the first time amid a greater risk appetite among investors and the increasing expectation on the pension reform approval in Brazil. The Ibovespa rose 1.70% Monday, closing at 74,319.22 points and broke the previous closing record (73,516 points on May 20, 2008).

During the session, the Ibovespa reached 74,635.55 points in its intraday high, breaking the highest intraday level ever seen (73,920 points, on May 29, 2008). At that time, the Brazilian stock market was boosted by the investment grade credit rating granted to Brazil. Currently, the country has a speculative credit grade from the three major credit rating agencies.

"It was a positive day, not only for Brazil but for stock markets and risky assets abroad. The backdrop remains positive worldwide," said Hersz Ferman, an economist at Elite Corretora. In addition to the loose monetary policy in the world's greatest economies, investors became more optimistic after Hurricane Irma lost strength over the United States, he added.

Also, North Korea was expected to conduct further missile tests over the weekend. Since that did not happen, global sentiment toward risk has improved, said Ferman.

In Brazil, investors believe there is positive momentum to fiscal reforms due to recent political events and economic fundamentals, among them the decrease in interest rates.

The arrest of J&F executives Joesley Batista and Ricardo Saud on Sunday also improved the mood of market participants. They were pivotal for the corruption charge directed at President Michel Temer in June but were imprisoned for allegedly hiding evidence from public prosecutors.

The arrest, according to investors, increases Temer's political strength to pass the pension reform bill in the Congress.

Among the highest increases in Ibovespa were Eletrobras shares (ELET3 +7.06%, ELET6 +5.97%), with investors betting on the recovery of the electric sector. CSN (CSNA3 +5%), which has managed to increase steel prices further, and banks, such as Banco do Brasil (BBAS3 + 3.58%), also posted strong increases.

The locally traded U.S. dollar rose 0.32%, closing at R$ 3,1050 on a profit-taking movement by Brazilian investors and following the improvement in Treasuries, interest rates on U.S. securities, which increased after the hurricane Irma lost strength over the country.

In the short term, analysts have predicted that the Ibovespa will continue in a positive trend, reaching new record levels. Álvaro Bandeira, chief economist at Home Broker Modalmais, believes that the current scenario shows that there will be a "sufficient flow of resources in the market" to absorb possible selling pressures. He sees Ibovespa reaching 77,000 points shortly.

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