Brazil’s Stocks Join Emerging-Market Rally on U.S. Election Day

(Bloomberg) -- The Ibovespa posted its biggest two-day advance since April, erasing an earlier decline, as U.S. voters cast ballots as surveys showed Hillary Clinton narrowly ahead of Donald Trump in the presidential race.

The MSCI Emerging Markets Index rose, the dollar fell and Mexico’s peso and stocks rallied as investors awaited the outcome of a tight U.S. presidential contest. In Brazil, Vale SA joined a global rally in the mining industry as iron ore climbed. Clothing retailer Guararapes Confeccoes rose after third-quarter results exceeded analysts’ forecasts.

Foreign investors account for 53 percent of equity trading at the Brazilian exchange, and in recent days the Ibovespa has tracked the plot twists of the political race in the U.S., pushing volatility to the highest in six months. Investors have shown concern that Trump’s election would result in protectionist policies that would hamper exports to Brazil’s second-biggest market. U.S. state-by-state surveys Tuesday indicate a narrow lead for the Democrat.

"More than discussing who’s better, it’s predictability that matters the most to the market, and Trump means uncertainty," Celson Placido, a strategist at the brokerage XP Investimentos, said from Sao Paulo.

The Ibovespa added 0.2 percent to 64,157.68 in Sao Paulo after gaining and falling as much as 1.1 percent. Thirty-one of its 58 stocks ended the day higher. Vale gained 1.8 percent, and Guararapes rose 0.6 percent. Trading volume of stocks in Brazil was about 5 percent below the 30-day average.

A provider of real-time analysis of voter turnout estimates that Clinton has earned more early votes than Trump in battleground states including Florida, Iowa and Nevada. The site says its information isn’t making a prediction on who will win any states.

"Everybody is expecting Clinton to win, but we can’t just ignore the odds," Alvaro Bandeira, the chief economist at the brokerage Modalmais, said from Rio de Janeiro.

Brazilian stocks have advanced 85 percent in dollar terms this year, the best performance among major global benchmarks, on optimism that President Michel Temer’s government will be able to pull the nation out of its worst recession in a century.

As Temer’s team puts in place a plan to trim a budget deficit and encourage investments, a more stable global scenario favors the country’s recovery, according to Bandeira.

--With assistance from Yasmine Batista

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net.

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net, Jessica Brice