Vale shares are among the biggest gainers of the session and are giving a boost to the Ibovespa (Image: REUTERS/Pilar Olivares)
Being the most traded stock on the Brazilian market, the shares of Vale (ELECTION 3) jumped 5% in trading this Thursday (26).
At around 1 pm (Brasília time), VALE3 recorded a gain of 5.10%, at R$63.70, at its intraday high.
As it is one of the 'heavyweight' actions of the Ibovespa (IBOV), the mining company sustains the positive tone of the index — which is trying to regain 133 thousand points. Follow in Real Time.
In the wake of Vale, Bradespar (BRAP4) is also among the biggest gains on the Ibovespa. The shares rose 4.63%, to R$18.99.
But that's not all. The mining and steel sector led the gains of the main index of the Brazilian stock exchange this week. Highlights include: CSN (CSNA3) has already accumulated an increase of more than 16% in four sessions.
The impetus is given, once again, by the iron ore. The commodity posted its third consecutive day of growth in China and returned to a price of US$ 100 per ton.
The most-traded January iron ore contract on China's Dalian Commodity Exchange (DCE) pared earlier losses, ending the session up 1.75 percent at 728 yuan ($103.73) a tonne.
Benchmark iron ore for October on the Singapore Exchange rose 2.49% to $98.80 a tonne. The contract hit $99.25 a tonne during the day, approaching the psychological $100 a tonne mark for the second time this week.
In a series of stimulus announcements, China unveiled new measures to revive the country's economy, boosting confidence as the latest wave of monetary easing frenzy began to fade.
Today, Chinese leaders pledged to implement “necessary fiscal spending” to meet this year’s economic growth target of around 5%, in a move that surprised the market.
China stimulus package
Earlier this week, China's central bank (PBoCin the English acronym) launched the largest stimulus package since the pandemic to pull the economy out of its deflationary state and back to meeting the government's growth target.
Focusing on the real estate market, the Central Bank reduced average interest rates for existing mortgages by 50 basis points and cut the minimum down payment requirement to 15% for all types of housing, among other measures.
The Chinese central bank also introduced two new tools to boost the capital market.
The first was a program of swap with an initial size of 500 billion yuan, which allows funds, insurers and brokerages to have easier access to financing to buy shares.
The second measure offers up to 300 billion yuan in “cheap” loans from the central bank to commercial banks to help them finance purchases and buybacks of shares from other entities.
The broader-than-expected package, which offers more financing and rate cuts, marks Beijing's latest attempt to restore confidence after a string of disappointing data raised concerns about a prolonged structural slowdown.
In addition, the PBoC reduced interest rates for a period of 14 days — starting on Monday (23) —, which was considered a small sign of the announcement of new monetary stimulus and foreshadowed the other measures.
The stimulus boosted sentiment in commodities markets, including iron ore, whose price gains completely erased losses recorded in September.
*With information from Reuters