MercoPress. South Atlantic News Agency

Brazilian Bovespa market index up 1.75%; Real suffers a slight depreciation

Brazil's Real was down slightly despite currencies throughout the region were up modestly

Brazil's benchmark Bovespa index rose 1.75% on Tuesday, rallying for a second straight day largely on a spike in commodities prices. Two of the Bovespa's most heavily weighted equities, miner Vale and oil giant Petrobras benefited from rising commodity prices worldwide amid escalating China-U.S. trade tensions and signals OPEC is not prepared to raise output to address shrinking supplies from Iran.

With three weeks to go before the first round of Brazil's presidential election, investors are adjusting their expectations now that Geraldo Alckmin, the favorite of financial markets, is no longer considered likely to secure a spot in the run-off likely to occur later in October. That makes far-right candidate Jair Bolsonaro increasingly the default choice for investors.

“There's disbelief that Alckmin can move up, and the market is betting on Bolsonaro,” Brazilian broker Spinelli said in a note to clients.

Brazil's Real was down slightly despite currencies throughout the region were up modestly. The Brazilian currency has posted some of the biggest losses in the region this year despite initial hopes of a significant economic recovery this year.

The US dollar reached 4.1401 Real at the end of Tuesday forex trading, with a daily slide of 0.29% for the Brazilian currency that so far this year has depreciated almost 21%.

This Wednesday the Brazilian central bank Monetary Policy Committee will be meeting to decide on the Selic rate, which currently stands at 6.50%. Despite the plunge of the Real, and inflation remaining below the official target rate, markets believe there will the interest rate will remain unchanged.