SAO PAULO: Brazil's benchmark Bovespa equities index rose more than 1 percent in morning trade on Monday as the expiry of options contracts and moves among some heavily weighed stocks offset concerns about the outcome of October's presidential election.
Monthly options contracts on the Bovespa expire on Monday, which brought significant volatility to the market, particularly in morning trade, traders said. Given the technical nature of the gains, the traders said the Bovespa's rally was relatively fragile and could be reversed in the afternoon.
While gains were evenly distributed - only eight Bovespa stocks were in the red at mid-day - some particularly heavily weighted equities helped buoy the index.
Shares in food processor BRF SA soared more than 6 percent after Goldman Sachs analyst Luca Cipiccia raised his recommendation on the stock to "buy" from "hold" and hiked his price target on the stock to 30.80 reais from 19 reais, previously.
Preferred and common shares in state-run oil company Petroleo Brasileiro SA, known as
Petrobras, both climbed about 1.5 percent amid heavy options trading and a Reuters interview in which the firm's chief financial officer gave 2019 oil production targets.
Overall, the Bovespa climbed 0.89 percent in mid-day trade.
It had risen well more than 1 percent earlier, despite opinion polls showing that a presidential election run-off between the hard-right and hard-left candidates is increasingly likely.
"With the growth of Fernando Haddad's candidacy and Ciro Gomes staying at the same levels, time is running out every day for the other candidates to make the run-off," analysts at BTG Pactual wrote in a note to clients, referring to two leftist candidates who have spooked markets.
One of the two is seen as increasingly likely to face hard-right Jair Bolsonaro in a run-off.
Across Latin America, currencies climbed modestly against the dollar, with the exceptions being the Peruvian sol, which was off 0.12 percent against the dollar in morning trade.
Political tensions are rising in Peru after President Martin Vizcarra dared lawmakers to dismiss the entire cabinet late on Sunday, a move which could, under Peru's constitution, lead to Vizcarra dissolving Congress.
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