EMERGING MARKETS-Brazil currency, stocks jump on hopes of fiscal austerity

jueves 14 de julio de 2016 12:27 GYT

By Bruno Federowski
    SAO PAULO, July 14 (Reuters) - Brazil's currency and stocks
jumped on Thursday on hopes interim President Michel Temer will
manage to push through austerity measures following the election
of a right-leaning ally as speaker of the lower house of
    Rodrigo Maia of the Democrats party, known as DEM, handily
won a vote to replace speaker Eduardo Cunha who quit last week
as he faced expulsion from the legislature over ethics
    "Maia will likely fight by Temer's side in seeking to pass
fiscal measures in Congress," analysts with H.Commcor brokerage
wrote in a client note.
    Temer told reporters Maia's election on early Thursday
showed growing political harmony. 
    Analysts say that could grease the wheels for the approval
of a bill that limits public expenditure growth, which can help
curb inflation and reverse swelling budget deficits.
    Maia's victory also quelled investor fears over the
candidacy of Marcelo Castro, a candidate from Temer's own Brazil
Democratic Movement Party.
    Castro had voted against the impeachment of suspended
president Dilma Rousseff, whose interventionist policies were
blamed by many investors for driving Brazil into its deepest
recession in decades.
    Rousseff was replaced by Temer, her vice president, pending
an impeachment trial in the Senate in which senators are
expected to vote for her permanent removal. 
    Brazil's real currency rose 1.3 percent, while the
country's Bovespa benchmark stock index advanced 1.2
percent in its seventh straight day of gains.
    Among strong equities gainers were financial shares. Credit
Suisse analysts improved their recommendation for shares of
banks Bradesco SA and Itaú Unibanco SA to
"outperform" and "neutral", respectively.
    Shares of Usinas Siderúrgicas de Minas Gerais SA 
advanced 1.4 percent after sources told Reuters the steelmaker
is asking banks to extend a 120-day standstill agreement
covering 4 billion reais ($1.2 billion) in loans that expire
next week. 
    Other Latin American markets also rose after the Bank of
England signaled it could present a stimulus package in August,
though it surprised many investors by keeping interest rates on
    Argentina's Merval benchmark stock index hit a fresh
record high, while the Chilean peso strengthened over 1
    A rally in global stocks and crude prices helped support
appetite for high-yielding emerging market assets. The S&P 500
 and Dow Jones stock indexes hit new record highs
on Thursday after JPMorgan reported strong quarterly

    Key Latin American stock indexes and currencies at 1520 GMT:
 Stock indexes                               daily %    YTD %
                                              change   change
 MSCI Emerging Markets               866.68     1.21     7.83
 MSCI LatAm                         2368.11     2.23     26.6
 Brazil Bovespa                    55267.48     1.23    27.49
 Mexico IPC                        46640.44      0.8     8.52
 Chile IPSA                         4053.50     0.14    10.14
 Chile IGPA                        20030.19     0.13    10.35
 Argentina MerVal                  15402.13     1.69    31.92
 Colombia IGBC                      9860.25     0.26    15.36
 Venezuela IBC                     11914.88    -1.45   -18.33
 Currencies                                  daily %    YTD %
                                              change   change
 Brazil real                         3.2310     1.30    22.16
 Mexico peso                        18.3130     0.37    -5.91
 Chile peso                           649.3     1.11     9.30
 Colombia peso                      2923.97     0.51     8.39
 Peru sol                             3.278     0.06     4.15
 Argentina peso (interbank)         14.5700     0.00   -10.90
 Argentina peso (parallel)            15.01     0.33    -4.93

 (Reporting by Bruno Federowski; Additional reporting by Paula
Arend Laier; Editing by W Simon)