Chilean stock indexes ended the session on Friday with their strongest one-day advance since late February, as regional markets rebounded after the US Federal Reserve cut its discount rate. The all-market IGPA index advanced 2.07 percent to 13,749.55 points, while the trade-weighted blue chip IPSA index rose 2.44 percent to 3,033.55 points.
On Thursday both indexes closed near five-month lows as global markets dropped on concerns about US mortgage credit problems. Early on Friday morning the Fed cut its primary discount rate, the rate it charges to banks, to 5.75 percent from 6.25 percent, a move that calmed global markets that were nervous about credit conditions and US economic growth. "I think it was very positive, not so much for the actual economic effect, but because it was a measure that calmed markets down." said Gabriela Clivio, head of research at the BBVA brokerage in Santiago.
"Emerging markets have a very strong potential," Clivio added. "But when the perception of risk increases, there's always a flight to quality to developed markets." On the Santiago exchange, late-session gains were led by retailers as regional powerhouse Falabella saw its shares rise rocket 4.68 percent, while No 1 supermarket chain D&S rose 4.78 percent. Falabella, Chile's largest retailer, has shown strong growth in sales and profit, amid aggressive expansion in fast growing neighbouring economies Peru and Colombia.
Wood pulp producers Copec and CMPC rose 3.76 percent and 3.64 percent. Both companies have seen improved sales and earnings on higher output from expanded production capacity and strong world prices for wood pulp. Other gain leaders Soquimich, the world's leading producer of iodine and lithium, with a gain of 3.92 percent, and Endesa Spain regional energy group Enersis with an advance of 3.37 percent.
Analysts say that volatility is likely to continue as news on developments in the US mortgage industry are reported. "I hope that next week the volatility subsides a bit, so that prices reflect the strong fundamentals we have in this economy," Clivio said. The Chilean peso rose 0.82 percent to 523.70/524.00 per dollar compared with Thursday's close at 528.00/528.30.
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