By Carla Mozee
Latin American equities were in the red Tuesday, with
nervousness about what's expected to be a rough first-quarter
earnings season in the U.S. spilling over into regional
indexes.
Stocks had a volatile session in Brazil and, at last check, the
Bovespa index moved out of positive territory to decline 0.6% at
43,898.
The Bovespa is set to lose ground for a second session in a row,
and the "beginning of the earnings season in the U.S. was decisive
into placing some caution among investors," said BB Investimentos
in a market review released Tuesday.
But gains among consumer durable and process industries
companies cushioned losses among miners and telecommunication
providers.
Leading advancers were shares of Cosan (CZZ), which climbed
6.1%. France's Louis Dreyfus Commodities has won an agreement to
purchase a stake in sugar and ethanol producer SantelisaVale,
according to Dow Jones Newswires, citing a source familiar with the
matter.
Analysts were concerned that a Cosan win would have been a
highly leveraged one for the company, according to the report.
U.S. stocks slid ahead off the kickoff of the reporting season
by aluminum giant Alcoa Inc. (AA). The company is expected to swing
to loss on lower sales as the recession has prompted customers to
soften demand for aluminum.
Earnings from companies on S&P 500 Index are expected to
show a drop of 35.9% compared with the year-ago period. All 10
sectors of the S&P are expected to report negative year-on-year
comparisons for the first time since Thomson began tracking results
in 1998.
The S&P 500 Index (SPX) fell 1.9% and the Dow industrials
(DJI) fell 164 points, or 2.1%.
Amid anxiety throughout the markets, Citigroup Inc. struck a
note of optimism on Tuesday, saying that it believes the next bull
market in Latin America is beginning and that it expects it to last
for the next four or five years, "as the global economy eventually
moves into recovery mode and regional fundamentals improve."
It forecast a solid rise in commodity prices during the next
bull market but predicted that a "new bubble is unlikely." It also
expects material, energy and financial stocks to outperform.
Citigroup said Brazil and Peru are likely to be the main drivers
of the bull run and expects Mexico to catch up after a lag because
of the link to weakened U.S. economic conditions. It dropped
Wal-Mart de Mexico and Mexican market heavyweight America Movil
from its focus list.
In Mexico, the IPC index fell 1% to 20,590.52. There, shares of
Wal-Mart de Mexico were off 0.9% ahead of the retailer's report for
same-store sales in March, due after market close.
Analysts at UBS said the figures will be hurt by the calendar
effect of Holy Week, as this year it arrived in April as compared
with an arrival in March in 2008.
America Movil shares were down 3%.
Investors in Mexico and Chile also assessed inflation reports on
Tuesday.
Consumer prices in March rose 0.58%, above the consensus
estimate of 0.51%. Headline inflation rose 6% in March on a
year-over-year basis, compared with a 6.2% increase in February.
The central bank, which meets to next week to decide its next move
on interest rates, has an inflation target range of 2% to 4%.
In Chile, consumer prices in March rose 0.4%, the first increase
in five months. Inflation on an annual basis came in at 5%, slower
than the 5.5% increase at the end of February.
The decline in inflation in Chile could bolster the central
bank's decision to cut its key interest rate on Thursday. Market
players currently expect a rate cut of 50 basis points from the
current rate of 2.25%.
Chile's IPSA index fell 1.2% to 2,515.12.