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While you were sleeping: Wall St rebounds, Brazil slumps

Friday 19 May 2017 07:39 AM

While you were sleeping: Wall St rebounds, Brazil slumps

By Margreet Dietz

May 19 (BusinessDesk) - Wall Street climbed, recovering some of Wednesday’s losses, while Brazil’s stocks, bonds and currency slumped as concern about the nation's corruption scandal intensified, implicating President Michel Temer.

Brazil’s Ibovespa Index plunged 8.5 percent in mid-afternoon trading.

“Markets will overreact, but the reality is that Brazil is rooting out the corruption that has plagued it for centuries,”James Gulbrandsen, a Rio de Janeiro-based portfolio manager at NCH Capital who holds Brazilian shares, told Bloomberg. “This significantly increases the likelihood of new elections within the coming months.”

Meanwhile, Wall Street rebounded, following Wednesday’s declines amid reports that prompted concern US President Donald Trump tried to obstruct justice. In 3.14pm trading in New York, the Dow Jones Industrial Average rose 0.5 percent, while the Nasdaq Composite Index climbed 0.8 percent. In 2.59pm trading, the Standard & Poor’s 500 Index gained 0.6 percent.

“This whole bull market is all about panic attacks followed by relief rallies, and this was another one,” Ed Yardeni, president of Yardeni Research Inc in Brookville, New York, told Bloomberg. “My hunch is that the Trump impeachment panic attack was a one-day wonder and we’ll move on from there.”

The Dow rose, led by gains in shares of Wal-Mart Stores and those of Verizon, up 3.1 percent and 2.4 percent respectively.

Shares of Wal-Mart Stores climbed after the world’s top retailer posted quarterly results that showed better-than-expected sales both in stores and online.

"Wal-Mart's commitment to value pricing is driving traffic and growth in grocery and aggressive online strides are impacting comparable sales," Cowen & Co's senior research analyst Oliver Chen said in a note, Reuters reported.

Walmart said US comparable sales rose 1.4 percent in the quarter ended April 28, driven by a traffic increase of 1.5 percent.

Its US online sales increased 63 percent in the first quarter, while gross merchandise volume climbed 69 percent, Wal-Mart said, adding that he majority of this growth was organic through Walmart.com.

“All of a sudden, Wal-Mart is the primary competitor to Amazon, as opposed to a fragmented cluster of people,” Greg Portell, a partner at consulting firm AT Kearney, told Bloomberg.

Bucking the trend were shares of Cisco, which plunged 7.8 percent for the largest percentage drop in the Dow. Cisco announced further job cuts and offered an earnings outlook that fell short of expectations.

“We saw a significant slowdown in the US public sector, particularly the federal business—which is a pretty significant business for us—due to the uncertainty in budgets," CEO Chuck Robbins told CNBC.

In Europe the Stoxx 600 Index finished the session with a slide of 0.5 percent from the previous close.

Germany’s DAX Index fell 0.3 percent, while France’s CAC40 Index declined 0.5 percent, and the UK’s FTSE 100 Index dropped 0.9 percent.

(BusinessDesk)

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