Ibovespa Posts Longest Rally in Six Years Amid Recovery Bets

(Bloomberg) -- The Ibovespa posted its longest rally since 2010 as investors tried to assess how successful Acting President Michel Temer and his economic team will be in pulling Brazil out of its deepest recession in a century.

Meatpacker JBS SA was the best performer on the index, and lender Banco do Brasil SA contributed the most to its advance. Health-plan provider Qualicorp SA extended a two-day rally after a report that private equity funds have plans to buy the company. Miner Vale SA slumped as commodities retreated.

The Ibovespa fluctuated between gains and losses on Tuesday, with a rally in consumer stocks offsetting losses in commodity producers, amid speculation over the next steps of Temer’s plan to restore growth. The economic team is said to present stimulus measures to the head of the nation in two weeks, according to a source that participated in a cabinet meeting this afternoon and asked not to be named as the discussions are not public.

“The outlook for the Ibovespa seems a bit better,” said Ignacio Crespo, an economist at Guide Investimentos brokerage in Sao Paulo. “It’s not going to go up in a straight line, but if markets continue to welcome Temer’s measures, there will be room for further gains.”

The Ibovespa added 0.4 percent to session-high 56,698.06 at the close of trading in Sao Paulo after earlier falling as much as 0.4 percent. Qualicorp rose 2.6 percent, and Banco do Brasil jumped 4.9 percent. Vale declined 2.8 percent. State-controlled oil producer Petroleo Brasileiro SA, known as Petrobras, rose 2 percent after saying its board will discuss bids for its gas distribution unit in a meeting.

Brazil’s stocks are posting the best rally this year on optimism that Temer, who replaced Dilma Rousseff as she faces an impeachment trial for allegedly breaking budget laws, will be able to shore up the country’s finances and restore growth.

Short bets on iShares MSCI Brazil Capped ETF, traded in New York, fell to the lowest since February 2013.

--With assistance from Anna Edgerton and Elena Popina To contact the reporters on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net, Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net. To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net, Rita Nazareth, Richard Richtmyer