TAM & GOL Airlines Lift Brazilian Stocks
Stocks in South American airlines rally
Brazilian stocks gained Thursday, breaking with declines in Mexico and Chile, as airline operators TAM Sa and GOL Linhas Aereas rallied. The Bovespa rose 836.2 points, or 1.3 percent, to 66,322, lifted by more than 3 percent rises in the local shares of TAM (TAM) and competitor GOL (GOL).
The rise in Brazilian airline stocks paralleled gains in the US, where the NYSE Arca Airline index (XAL) added 1 percent on better-than-expected results from Delta Air Lines, Inc. (DAL) and US Airways Inc. (LCC) and a drop in oil prices.
Aircraft manufacturer Embraer Empresa Brasileira de Aero (ERJ) and Banco Bradesco (BBD) also led the index higher, which is recovering from a steep sell-off on Tuesday after the government imposed a tax on foreign purchases of securities.
Brazil's real, which also tumbled earlier this week on the move to rein in foreign capital flows, gained against the US dollar. One US dollar bought 1.7195 reals, down from 1.728 late Wednesday.
Late Wednesday, Brazil's central bank decided to keep its key interest rate unchanged at 8.75 percent.
The Bovespa's gains contrasted with drops in Mexico and Chile.
Mexico's IPC index slid 130 points, or 0.4 percent, to 30,759.
RBC Capital Markets analysts said they now anticipate all ratings agencies will downgrade Mexico's credit ratings by one notch, to triple-B, within weeks, after the country's main political party approved tax increases that failed to widen the taxable base.
Chile's IPSA lost 7 points, or 0.2 percent, to 3,418.
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