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 Business News | September 2007 
Latin American Markets: Stocks Hurt As Shadow Looms Over Possible US Rate Cut
 Dow Jones
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San Francisco - Latin American equities fell early this week, succumbing to pressure stemming from comments by U.S. Federal Reserve officials that cast doubt on the possibility of an interest-rate cut next week.
Brazil's Bovespa index slid 3.5% to 52,652.57, as stock investors reacted to Friday's sharp equities downturn in Latin America and the United States, after a contraction in the August jobs report sparked fears that the U.S. economy is being damaged by the ongoing troubles in the subprime and credit markets.
Last week, Brazilian stocks rose 0.12%. The week was shortened by the Independence Day holiday.
In Mexico, the IPC lost 1.2% to 29,892.18 as shares of just four of its 35 components posted gains. The Merval in Argentina fell 1.1% to 2,018.16, and Chile's IPSA lost 1.4% to 3,155.56.
The monthly drop of 4,000 U.S. jobs bolstered the possibility that the benchmark interest rate will be cut from 5.25% when the Federal Reserve meets Sept. 18.
But market players hoping for a rate cut were discouraged Monday by a speech from Philadelphia Fed President Charles Plosser, who said on Saturday that the Fed has tools other than "a shift in the overall direction of monetary policy" to deal with distress in the financial markets.
Additionally, Atlanta Fed President Dennis Lockhart said that the jobs lost in August should be viewed in the context of "recently positive reports in retail sales."
The Dow Jones Industrial Average (DJI) managed to finish with a gain of 15 points at 13,127.80 after a volatile day of trading. But the S&P 500 Index (SPX) and the Nasdaq Composite Index (RIXF) ended lower.
Market players will also look for comments from Federal Reserve Chairman Ben Bernanke when he speaks on Tuesday in Berlin.
In Brazil, the Bovespa dropped as market-volume leader Petrobras (PBR) fell 2.4% though crude-oil prices staged a turnaround to finish up 1% at $77.49 a barrel.
Traders were preparing for Tuesday's Organization of the Petroleum Exporting Countries meeting in Austria, where most analysts expect the cartel to leave production levels unchanged.
Companhia Vale do Rio Doce (RIO) shares fell 3.3%. The mining giant said that it plans to give up rights to iron-ore sales from the Case de Pedra mine as it appeals a related antitrust-case ruling.
Shares of Mexican home builders were down, as they continue to be hit by concerns that they will be hurt by the mortgage-market downturn facing their largest trading partner's economy.
Consorcio Ara fell 2.8%, Urbi Desarrollos lost 1.4%, Geo slipped 0.2% and Homex (HXM) gave up 0.4%.
Shares of cement maker Cemex (CX) tumbled 4.25 and retail Wal-Mart de Mexico slipped 0.6%. Volume leader America Movil (AMX) also fell, by 0.2%. |
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