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Americas defer to Nasdaq
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April 27, 2000: 7:07 p.m. ET
Blue chips stabilize Brazil, revive Mexico; interest rate fears sink Toronto
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NEW YORK (CNNfn) - Taking a cue from both the Nasdaq composite index and U.S. interest rate data announcements, markets in the Americas suffered a topsy-turvy day, closing, for the most part, with considerable losses.
Nasdaq-inspired traders on the Brazilian Bovespa index helped bring the market up from a morning plunge to end flat. Stocks in the telecom sector benefited most.
U.S. interest rate data and its potential long-term effect initially alarmed many traders on the Mexican bolsa, where stocks plummeted mid-morning. However, Nasdaq's late-afternoon gains helped the bolsa recoup its losses and finish ahead, as telecoms and media stocks saw a nice return of investor interest.
The U.S. interest rate jitters also impacted the Toronto Stock Exchange's 300 composite index. Although the market managed to recover more than 50 percent from an early day 200-point losses, it still ended down, with eight of the 14 subindexes in the red.
Brazilian stocks end flat
Brazilian stocks recovered from a morning plunge of around 4 percent to end the day nearly flat, with traders saying the market was consolidating at current levels and preparing for a rise.
"A lot of blue chips performed strongly today, which shows that the market wants to go up," said Renato Vercesi of brokerage BBA/Icatu. Late gains in the technology-heavy Nasdaq index in the U.S. also helped, despite a tiny dip in the Dow Jones industrial average. The Nasdaq gained nearly 4 percent, while the Dow closed a marginal 0.5 percent down.
The Sao Paulo Stock Exchange's blue chip Bovespa index closed only 0.04 percent off at 15,440 points, recovering from the day's low of around 14,800. Turnover was heavy at one billion reals or $555 million.
Among the few losers was phone company Telesp, which fell about 5 percent to 45.1 reals in active trading. Steel maker CSN lost 3.3 percent to 47 reals after disappointing the market with lower first quarter profits Wednesday and despite buy recommendations from some banks.
On the positive side, giant phone operator Embratel rose 6.4 percent to 41 reals and cable television and Internet operator Globocabo jumped 6.6 percent to 3.1 reals.
Traders said Globocabo's rise, as well as the gains in most other telecommunications stocks, was directly linked to the strong performance of the Nasdaq. The Nasdaq had been the main culprit behind recent bloodletting in Brazilian stocks.
Traders attributed the morning plunge to fears about the impact of U.S. economic data that point to a consumer-spending binge and rising prices in the world's biggest economy.
Some traders said later the market "overreacted" under the influence of speculators and was later partly guided by Wall Street.
The new shape of the Bovespa index, which on Tuesday will drop Telebras receipts and add new issues like heavily traded Globocabo, was another factor behind the activity Thursday, traders said.
This particularly helped Globocabo, as investment funds bought the paper to adjust their portfolios -- which use the Bovespa as benchmark -- to the new changes.
The status of Telesp in the Bovespa grows with the departure of Telebras, but traders said the former's drop Thursday was partly due to expectations it would also be dropped from the index after Spain's Telefonica completes buying back the shares of its affiliate.
The Bovespa has lost 13.3 percent so far in April, mainly due to recent losses on the Nasdaq, and 9.6 percent since the beginning of the year.
Elsewhere in South America, Argentina's MerVal index was down 8.12 points to close at 505.89. The Peruvian IGRA index was down 6.52 points to close at 1,625.98, and in Chile, the IGPA index was down 12.07 points to close at 4,987.95.
But in Venezuela, the IBC index closed at 5,374.38, up 51.47 points.
Mexican stocks rebound
Late afternoon gains on the Nasdaq injected life back into Mexican stocks Thursday, helping them overcome an early slump after the release of U.S. data stirred concerns about interest rates, traders said.
After bottoming out at 6570.45 points, the 35-share IPC index ended 93.71 points, or 1.39 percent, higher at 6844.78.
The morning rout for Mexican shares was the result of a higher-than-expected 1.4 percent growth rate in the U.S. employment cost index (ECI) that suggested rising inflationary pressures and fanned worries could lead to higher lending costs north of the border.
If U.S. interest rates move higher, it makes credit access in American markets more difficult for Mexican companies, traders said. But almost as an afterthought Thursday afternoon, investors shifted out of interest sensitive U.S. stocks and moved into tech issues in the belief they could better weather a rate increase.
 In Mexico, two telecom and one media heavyweight tracked the Nasdaq, while top local banking issues dipped, hurt by the Dow, market watchers said.
"We keep walking hand in hand with the Nasdaq. We are displaying similar moves," said Pedro Monroy, an analyst with the CBI brokerage in Mexico City.
Bellwether Telefonos de Mexico (Telmex), with a 28.5 percent weighing in the IPC Thursday, ended up 0.95 peso, or 3.41 percent, at 28.85 pesos, while its American depository receipts (ADRs) firmed 1-2/16 to 60-15/16 in New York.
Carso Global Telecom, which holds a stake in Telmex, rose 1.10 pesos, or 4.38 percent, to 26.20 pesos. Its weighting in the IPC was 9.57 percent.
Top Spanish-language media company, Grupo Televisa, also gave a boost to the market as its CPO shares finished 0.30 peso higher at 30 pesos. But its ADRs on Wall Street closed off 5/8 at 63.
Four banking groups included in the IPC index ended in the red. Banks will face harder times compared with other sectors in the event interest rates in the U.S. move higher, traders said.
The most heavily-traded issue was Grupo Financiero Bancomer as 16.44 million of its O shares changed hands. The group closed off 0.06 peso at 4.36 pesos.
Rival Grupo Financiero Banamex-Accival (Banacci) O shares eased 1.7 pesos to 34.90 pesos.
Deutsche Banc Alex Brown upped Banacci to a strong buy from buy in light of the group's strong first quarter results. Dresdner Kleinwort Benson also upgraded Banacci to buy from add based on valuation levels.
Grupo Financiero Inbursa O shares dived 1.2 peso to 38.80 pesos, while Grupo Financiero Banorte slipped 0.20 peso to 13.10 pesos per each O share.
Volume on the broad Mexican market was 76.73 million shares, compared with Wednesday's 106.1 million.
Out of 72 active issues, declines matched gains on a 29-29 basis, while 14 stocks closed unchanged.
Traders expected volumes to pick up a bit Friday as several local and foreign funds could do some month-end window dressing.
Toronto stocks end lower
Toronto's benchmark stock index, which dropped more than 200 points at the open, gained back some ground Thursday but still closed lower as interest rate jitters seeped into the market.
The Toronto Stock Exchange's 300 Composite Index closed down 55.34 points, or 0.59 percent, at 9322.66 on volume of 123.7 million shares worth C$3.92 billion. Decliners edged advancers 546 to 537 with another 296 issues closing flat.
This followed a 200-point dip at the opening of trading as better than expected U.S. employment data raised fears that the U.S. Federal Reserve might be forced to raise interest rates higher and faster than planned.
"I think there was a shock reaction (at first) and then people said 'Is this very worse than we thought it was going to be?' And the answer was no. Yes, it was a down day but it wasn't very much of a down day," said Kate Warne, Canadian market strategist at Edward Jones in St. Louis, Mo. "I think the sentiment is cautious but not as worried as would be expected."
Earlier Thursday, the U.S. Labor Department said its closely watched Employment Cost Index (ECI), a broad gauge of what employers pay in wages, salaries and benefits, shot up by a much-higher-than-expected 1.4 percent in the first quarter, building on a 1.0 percent rise in the last quarter of 1999 and marking its biggest gain in more than 10 years.
Economists polled by Reuters had expected a more modest 0.9 percent in the quarterly ECI, which the Fed monitors closely for signs of rising wage and price pressures that could boost inflation in the booming U.S. economy.
The data prompted fears that the U.S. central bank's policy setting group, which meets May 16, might raise short-term interest rates by an aggressive 50 basis points.
Warne said she believes the Bank of Canada -- which is expected to match a 25-basis point U.S. interest rate hike -- will likely not match a higher rate rise by the Fed.
"I think (what) the Bank of Canada will be watching is the currency between now and then. If the currency continues to be weak, then I think they'll do the full 50 basis points and match, if the Fed does that," she said.
Toronto's blue chip S&P/TSE 60 index finished 7.32 points, or 1.29 percent, lower at 560.66 points.
Overall in Toronto, eight of the TSE 300's 14 subindexes closed lower, led by a 2.14-percent decline in utilities, a 1.57-percent fall in conglomerates, a 1.39-percent dip in transportation, a 1.3 percent drop in metals and minerals and a 0.72-percent downturn in the industrial products sector.
In the utilities sector, heavyweight BCE Inc. gave back some of the gains it made in the previous session to end C$5.00 lower at C$169.00.
 In the industrial products group, Nortel Networks Corp., which topped the most actives list, closed down C$5.40 to C$167.50.
Between them, BCE and Nortel account for more than 30 percent of the overall index.
Also lower were financial services, down 0.63 percent, consumer products, off 1.05 percent, and paper and forestry products, which closed 0.31-percent lower.
On the upside, the gold sector, a popular hedge against inflation, closed up nearly 1.97 percent.
In that sector, Barrick Gold Corp., North America's second-largest gold producer, gained 80 Canadian cents to end at C$25.20.
Also closing higher were the media, oil and gas, real estate, merchandising and pipelines sectors. 
--From staff and wire reports
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