By Carla Mozee
Brazilian and Mexican equities vaulted Monday to levels not seen
in roughly a year following a round of better manufacturing data
from major world economies and a jump in prices for
commodities.
Brazil's Bovespa climbed 2.4% to 55,997.81, its best finish
since Aug 28, 2008.
Mexico's IPC rose 2.4% to 27,692.48, marking its highest close
since July 21, 2008. There, shares of cement maker Cemex (CX)
advanced 3.4%, steel maker Industrias CH rose 4.2% and American
Movil (AMX) surged 4.1%.
In Buenos Aires, the Merval index jumped 3.2% to 1,776.36,
fronted by a 4.7% rise in shares of steel-tube maker Tenaris
(TS).
Chile's IPSA rose 1.5% to 3,274.62, logging its best finish
since early December 2007.
Prices of natural resources climbed as global economic growth
prospects brightened following a batch of reports that showed
improvement in the manufacturing sectors in the U.S., China and the
U.K.
The Reuters/CRB Index (CRB), a benchmark that gauges the prices
of major commodities, gained 3.4% to $266.23.
"Recovery fever is running very high now, after last Friday's
U.S GDP data came out slightly less bad then expected and now on
the positive Chinese [purchasing managers' index] data out to start
the week," wrote analysts at Saxo Bank in a note Monday.
The Institute for Supply Management said its index rose to 48.9%
in July from 44.8% in June, showing that the U.S. manufacturing
downturn is coming to an end. The July reading index was the
strongest since September. Analysts polled by MarketWatch expected
a reading of 46.2%.
Earlier Monday, CLSA Asia Pacific Markets said its China
manufacturing PMI gained for the fourth consecutive month in July,
rising to 52.8 from 51.8 in June. The expansion was the fastest
since May 2008.
Purchasing managers' sentiment rose in the U.K. and the euro
zone during July, with the U.K. gauge indicating economic expansion
for the first time since March 2008.
"Words of optimism are creeping from every corner, and the
overbought equity market still seems to be able to find a reason to
rally even further," wrote Saxo analysts.
In Brazil, industrial production continued to stabilize in June,
rising 0.2% from May, when production rose 1.2%, according to
statistics agency IBGE. It was the sixth month in a row of
expansion, and was led by a 2.1% rise in capital goods.
On a year-over-year basis, production fell 10.9% in June.
Analysts at UBS Pactual had expected a decline of 11%.
In futures trading, oil for September delivery rose 3% at $71.58
a barrel. Copper prices jumped 4.4% to $2.7385 a pound, finishing
at their highest level since October.
September silver rose 2.2% and October platinum rose 2.1% to
$1,239.70 an ounce.
The rise in oil and metals prices helped shares of Brazilian oil
giant Petrobras (PBR) rise 3.4%, and those of iron-ore giant Vale
(RIO) rise 2%.
Shares of aircraft maker Embraer (ERJ) led advancers on the
Bovespa, up 9.2% and extending gains from Friday after its rating
was upgraded to neutral by Credit Suisse.
Also, shares of Banco Bradesco (BBD) rose 2% after the banking
firm reported a 15% rise in quarterly profit.
In Mexico City, shares of manufacturing firm Grupo Carso gained
3.8% and copper miner Grupo Mexico rose 2.4%
Commodity prices were also aided by a fall in the U.S. dollar
against its major rivals. Dollar weakness tends to boost
dollar-denominated commodities because it makes them cheaper for
holders of other currencies.
The dollar index (DXY) lost 0.9%.