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Brazil's Unemployment Rate Rises to 9.6% |
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Written by Paul Davee
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Wednesday, 26 October 2005 |
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Brazilian Latin American markets advanced, with Mexican shares posting some of the region's biggest gains on a positive earnings report from America Movil. Argentine issues were also strongly higher, as investors eagerly await progress on key economic initiatives.
Brazil's Bovespa Index rose 231.94 points, or 0.79%. Mexico's benchmark Bolsa Index jumped 298.35 points, or 1.94%, while Argentina's Merval Index rallied 32.76 points, or 2.08%.
Mexican stocks rallied, as investors cheered a bullish earnings report from America Movil. Late yesterday, the company said its third-quarter operating profits jumped 39.5% from a year ago. However, net profits fell due to higher financial costs.
The company added 22.5 million subscribers in the first nine months of the year to 83.6 million. An influential investment bank raised its price target for America Movil to US$ 35 from US$ 33.28 on the strong financial results.
Cintra said its third-quarter net earnings fell to 358.1 million pesos from 1.53 billion pesos a year ago, due to higher fuel prices. Sales rose to 10.49 billion pesos from 10.38 billion pesos. The company is in the process of selling its two main airlines.
Elsewhere, Brazilian shares gained ground on upbeat earnings news and hopes for further interest-rate cuts. Investors expect a dovish tone from minutes of this month's central bank monetary policy meeting to be released tomorrow. The bank had lowered the rate to 19% in mid-October from 19.5%.
On the earnings front, long-distance carrier Embratel Participações reported a third-quarter net profit of 54.3 million reais, reversing a year-ago net loss of 66.6 million reais.
Meanwhile, electric power holding company Energias do Brasil SA posted a third-quarter net profit of 54.6 million reais, reversing a net loss of 545,000 reais, a year earlier.
In other corporate news, mining giant Vale do Rio Doce confirmed late yesterday its intention to reopen its existing 2034 bond, using net proceeds of the offering for general corporate purposes.
Among economic indicators, the Brazilian Census Bureau reported that Brazil's official jobless rate in September unexpectedly rose to 9.6%. Unemployment had been unchanged at 9.4% from July through August. In September 2004, unemployment was at 10.9%.
Also, Brazilian supermarket sales fell by 1.39% in September from a year earlier, as high interest rates continued to crimp consumer spending.
In political developments, the brothers of assassinated PT mayor Celso Daniel said in congressional testimony today that leaders of Brazil's governing Workers' Party were aware of an irregular kickback and political- campaign-funding scheme in operation before the country's 2002 elections.
The brothers reaffirmed allegations that presidential top aid Gilberto Carvalho, who used to work with Daniel, was involved in the scheme.
Argentine issues advanced on hopes the administration of President Nestor Kirchner will now be able to move forward with key economic reform initiatives now that the congressional elections are over.
The election outcome is expected to significantly boost Kirchner's backing in Congress, helping him move ahead with his economic agenda.
Outstanding issues to be addressed include mounting inflation, renegotiating contracts with the utility sector and securing a new financing agreement with the International Monetary Fund.
Thomson Financial Corporate Group – www.thomsonfinancial.com
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