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BRAZIL-ECONOMY-STOCKS
Sao Paulo stock exchange at record close above 100,000 points
SAO PAULO, June 20, 2019 (BSS/AFP) – Sao Paulo’s stock exchange closed at
a record high on Wednesday, ending the day above the 100,000 points barrier
for the first time on the back of earlier statements by the US Federal
Reserve, experts said.
It came as Brazil’s central bank announced it was maintaining interest
rates at the historic low of 6.5 percent.
The Bovespa index, widely known as Ibovespa, ended the day at 100,303
points, an increase of 0.9 percent.
Only twice before, on March 18 and 19, had the Ibovespa crossed the
100,000 points threshold, only to drop back below it at the close of day.
“Today’s movement is a reaction to the Fed scenario,” Silvio Campos Neto,
an economist from the Tendencia consultancy, told AFP.
US stocks also gained after the Fed signaled it could soon cut interest
rates and said it “will act as appropriate to sustain the expansion” of the
economy.
Since President Jair Bolsonaro came to office this year, the Sao Paulo
stock market has gained more than 14 percent.
However, it has not been a smooth increase, with the stock market
fluctuating according to the progress of a proposed pension reform Bolsonaro
has been trying to get through Congress in order to reduce public
expenditures.
The central bank’s decision, which was expected, came with Brazil
dangerously close to another recession.
Analysts, though, believe it may ease that rate in a bid to spur
investment and consumption.
The bank has been calling for economic reforms as a precondition to
reducing interest rates.
As Bolsonaro’s proposed reforms have been thwarted, growth expectancy in
South America’s biggest economy has dropped.
At the start of 2019, analysts predicted gross domestic product would rise
by 2.5 percent, but the central bank drastically reduced that forecast this
week to just 0.93 percent.
“Recent indicators of economic activity suggest an interruption in the
process of recovery in the Brazilian economy over the last three quarters,”
said the central bank in a statement, adding that “there remains a risk of
deceleration in the world economy.”
BSS/AFP/HR/1010