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Financial News: BRAZIL: Ibovespa Rises Amid Interest Rate Cut Bets

BRAZIL: Ibovespa Rises Amid Interest Rate Cut Bets And Corporate Earnings

07/27/2017 - 20:40:00 (RTTNews)

(RTTNews) - Ibovespa, the benchmark stock market index in Brazil, closed up 0.41% at 65,277.38 points Thursday after the Brazilian central bank reduced the Selic rate by one percentage point and signaled with more cuts in the months ahead.

"There is an expectation on more aggressive Selic cuts by the monetary policy committee. Today we have seen the interest rates futures retreating strongly with investors adjusting positions. The tone of the statement was more monetary easing, which positively affected the stock market as well," said Rafael Passos, an analyst at Guide Investimentos.

Lower interest rates reduce fixed-income returns and increase demand for stocks - and in particular for shares of companies that depend on credit or that have high debt levels.

Natura shares ended higher (NATU3 + 6.11%) and had the biggest increase among Ibovespa's constituents. Vale shares were mixed (VALE3 +0.13%, VALE5 -0.46%), as weaker financial results in the second quarter were put under perspective after analysts said that the company showed a positive direction in the conference call with investors.

Ambev's shares (ABEV3 +1.49%) also reflected better corporate expectations and better data abroad, despite the still weak performance in Brazil, while Bradesco's preferred shares (BBDC4 -0.13%) closed slightly lower after quarterly data.

The locally traded US dollar ended higher, with a correction after Wednesday's losses with the definition of the monetary policy of the Federal Reserve. At the closing of the trading session, the US dollar rose by 0.38%, to R$ 3.1560 for sale.

For Friday, analysts believe that corporate earnings can continue to move the Ibovespa. Also, investors will be attentive to indicators like the Gross Domestic Product (GDP) of the United States.

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