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Brazilian stocks are expected to keep drifting higher this year on mixed company earnings, as food exporters feel the pinch from slower global growth, while banks take advantage of sky-high interest rates, a Reuters poll showed. In Mexico, whose economy is enjoying a good period that contrasts with trouble in other parts of Latin America, the S&P/BMV IPC stock index is expected to rise 7.5% to 57,475 points by year-end, for a total gain of 18.6% in 2023.
Volatility in global stock markets is not yet over, as more investors reckon interest rates will likely stay higher for longer, according to a Reuters poll of equity analysts, a slight majority of whom expected a correction within three months. Global stocks fell nearly 20% in 2022 and would have fared worse if it were not for a late-year rally on hopes falling inflation and weaker growth would force central banks to halt an historic rate-hiking run and swiftly start cutting within months. However, sticky inflation, strong labour markets and resilient economic growth so far this year have dashed those rate cut expectations, sending bond yields and market interest rate pricing sharply higher.
By Geoffrey Smith
SAO PAULO/LONDON (Reuters) -Brazilian equities were higher in choppy trade on Monday, a day after thousands of supporters of former President Jair Bolsonaro stormed government buildings in the capital, echoing the Jan. 6, 2021, insurrection in Washington. The Brazilian real weakened roughly 0.55% against the dollar in spot trading, while the country's benchmark stock index Bovespa gained 0.5% after falling as much as 0.75% earlier in the day. The coordinated invasion on Sunday afternoon, which overwhelmed law enforcement and left the Supreme Court building and other locations in Brasilia with severe internal damage, shocked observers, including many in the financial industry.
Wall Street saw mixed trading last week. Still, some ETFs recorded smart gains last week.
The global economy needs to find a more solid footing before most stock markets break out of their torpor, according to market strategists polled by Reuters who have broadly cut their 2023 forecasts compared with three months ago. That may be a tall order, however, given major central banks still have months to go before pausing one of the swiftest and most aggressive campaigns of interest rate hikes on record.
Brazil's Bovespa stock index has gained 10% this year, while the S&P 500 is down 25%.
Wall Street staged a rally last week. Some upbeat earnings and expectations of slower Federal Reserve monetary tightening boosted markets.
Brazilian state-run oil company Petrobras said on Thursday it will cut gasoline prices at its refineries to 3.71 reais ($0.7110) per liter from 3.86 reais starting Friday, a 4% cut that will take prices to their lowest level since March. The move is the second gasoline price cut by the oil giant this month and comes after it faced intense pressure from President Jair Bolsonaro and federal lawmakers to bring down prices amid soaring inflation and ahead of a general election in October. Analysts at Credit Suisse said in a note to clients they considered the move "marginally positive" as it would help to ease the political pressure on the company.