Brazil’s Stocks, Real as Brexit Bets Outweigh Gloomy GDP Data

Brazil’s stocks and the real rose as speculation that Britain is less likely to leave the European Union outweighed data showing Latin America’s largest economy shrank more than forecast.

Brazil’s benchmark stock index gained 1 percent to 49,411.62 Thursday in Sao Paulo after slumping as much as 1.7 percent. For-profit college operator Kroton Educational SA climbed for the first time in five days after the Brazilian government announced a plan to increase student loans in the country. The real strengthened 0.2 percent to 3.4660 per U.S. dollar.

The rebound in assets came as wagers that Britons would vote to leave the EU fell, according to Oddschecker’s survey of bookmakers’ implied probability. Those odds slipped below 38 after surpassing 44 hours earlier. The Ibovespa and the real earlier tumbled following data showing the Brazilian economy shrank more than forecast. The report signals that corporate performance may be slow to recover after the majority of publicly-traded companies reported earnings that trailed analysts’ estimates in the first quarter.

“The improvement in the global markets is spilling over here,” said Joao Paulo de Gracia Correa, the head of foreign currency at brokerage SLW in Curitiba, Brazil. “There’s no domestic factor pushing Brazilian markets higher."

While the economic team of Acting President Michel Temer has already proposed measures to tame the budget deficit that cost Brazil its investment grade, persistent political tension has fueled concern about the strengthen of lawmaker support for the recovery plan. Temer denied, in a speech in Brasilia, having requested illegal funds from a former executive linked to state-controlled Petroleo Brasileiro SA who accused him of asking for bribes. Meatpacker JBS SA also denied any wrongdoing after it was cited. The shares fell 4.1 percent, the most on the Ibovespa.

--With assistance from Andressa Lelli Denyse Godoy and Filipe Pacheco To contact the reporters on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net, Aline Oyamada in Sao Paulo at aoyamada3@bloomberg.net. To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net, Rita Nazareth