SAO PAULO, July 14 (Reuters) - Brazil's currency and stocks jumped on Thursday on hopes interim President Michel Temer will manage to push through austerity measures following the election of a right-leaning ally as speaker of the lower house of Congress.
Rodrigo Maia of the Democrats party, known as DEM, handily won a vote to replace speaker Eduardo Cunha who quit last week as he faced expulsion from the legislature over ethics violations.
"Maia will likely fight by Temer's side in seeking to pass fiscal measures in Congress," analysts with H.Commcor brokerage wrote in a client note.
Temer told reporters Maia's election on early Thursday showed growing political harmony.
Analysts say that could grease the wheels for the approval of a bill that limits public expenditure growth, which can help curb inflation and reverse swelling budget deficits.
Maia's victory also quelled investor fears over the candidacy of Marcelo Castro, a candidate from Temer's own Brazil Democratic Movement Party.
Castro had voted against the impeachment of suspended president Dilma Rousseff, whose interventionist policies were blamed by many investors for driving Brazil into its deepest recession in decades.
Rousseff was replaced by Temer, her vice president, pending an impeachment trial in the Senate in which senators are expected to vote for her permanent removal.
Brazil's real currency rose 1.3 percent, while the country's Bovespa benchmark stock index advanced 1.2 percent in its seventh straight day of gains.
Among strong equities gainers were financial shares. Credit Suisse analysts improved their recommendation for shares of banks Bradesco SA and Ita? Unibanco SA to "outperform" and "neutral", respectively.
Shares of Usinas Sider?rgicas de Minas Gerais SA advanced 1.4 percent after sources told Reuters the steelmaker is asking banks to extend a 120-day standstill agreement covering 4 billion reais ($1.2 billion) in loans that expire next week.
Other Latin American markets also rose after the Bank of England signaled it could present a stimulus package in August, though it surprised many investors by keeping interest rates on hold.
Argentina's Merval benchmark stock index hit a fresh record high, while the Chilean peso strengthened over 1 percent.
A rally in global stocks and crude prices helped support appetite for high-yielding emerging market assets. The S&P 500 and Dow Jones stock indexes hit new record highs on Thursday after JPMorgan reported strong quarterly results.
Comments
Comments are closed for this article.