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Financial News: BRAZIL: Ibovespa Rises To Nearly 85,000 Points Boosted

BRAZIL: Ibovespa Rises To Nearly 85,000 Points Boosted By Dovish Fed

03/21/2018 - 20:52:00 (RTTNews)

(RTTNews) - Ibovespa, the benchmark stock market index in Brazil, closed higher for the second straight session (+0.97%) Wednesday at 84,976.59 points, after the Federal Reserve signaled that it expects two more interest rate hikes this year in the U.S. - a dovish view, according to investors.

Fed members unanimously raised the benchmark interest rate by 0.25 percentage point (pp), to the range between 1.50% and 1.75% per year, and kept the forecast of two more interest rate hikes in 2018.

Investors were worried that the Fed could forecast an additional rate hike in 2018 and saw the decision and comments from the central bank chief, Jerome Powell, as favorable to emerging markets such as Brazil, since a higher interest rate in the United States could drain investment flows directed to the country.

Even before the decision, however, the Ibovespa was already trading higher with the help of Petrobras shares (PETR3 +3.80%).

Shares of Vale and steelmakers were also up, tracking iron ore prices, with steelmakers accelerating after the government said US steel tariffs would be suspended for Brazil as long as the two countries are negotiating. Brazil is trying to be exempted from the measures. CSN shares rose 5.46%, recording the best performance of the session, while Usimimnas rose 2.45%.

Suzano's shares (+4.33%) also performed well, still reflecting news of the purchase of Fibria and positive recommendations from Bradesco and BTG Pactual. Embraer's shares (+5.19%) advanced on rumors that the U.S. Boeing had finalized the proposal to acquire the commercial aviation sector of the Brazilian manufacturer.

On the negative end, the shares of Cielo (-2.96%), Smiles (-2.98%) and Eletrobras (-3.16%, ELET6 -2%) were among the largest Ibovespa casualties. The meeting of the joint committee that analyzes the privatization of Eletrobras, which would be held today, was canceled at the request of representative Hugo Motta, who chairs the working group, and was rescheduled for next week.

The locally traded U.S. dollar fell by 1.20%, to R$ 3.269.

For Thursday, analysts believe the stock exchange may continue to reflect the Fed's decision and the decision of the Brazilian central bank Monetary Policy Committee (Copom), which today cut its benchmark interest rate by 25 basis points, to 6.5% per year, a record low.

Investors should also monitor discussions at the Brazilian Supreme Court (STF) over the habeas corpus requested by the former President Luiz Inacio Lula da Silva.

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