Chile stocks rise on U.S. rate news, peso gains

Chilean stocks widened gains across the board on Thursday after the U.S. Federal Reserve raised benchmark interest rates in line with market expectations, and the peso advanced against the dollar. The IPSA blue-chip index rose 2.44 percent to 2,121.47 points, while the all-market IGPA index rose 1.75 percent to 9,847.38, preliminary closing figures showed.

The U.S. Federal Reserve raised its target overnight interest rate 25 basis points to 5.25 percent on Thursday, its 17th straight increase, and said inflation risks remain, even though slowing economic growth should help ease inflation. "Stock markets reacted very well to the Fed decision," said Rodrigo Andaur, an analyst with Fit Research consulting. "But they weren't clear about whether or not the rate hike cycle was close to ending. We'll have to see what data comes out between now and the next meeting of the Fed."

Heavily weighted energy and retail stocks pushed market indices up. Endesa Spain subsidiaries led trade amounts, with stock in Endesa Chile jumping 2.33 percent to 477 pesos and regional energy distributor Enersis surging 3.35 percent to 120.20 pesos a share.

Diversified retailer Cencosud climbed 3.13 percent to 1,300 pesos a share, while leading department store and consumer banking chain Falabella (FAL.SN: Quote, Profile, Research) advanced 2.83 percent to 1,630 peso a share. On the foreign exchange market the Chilean peso rose 0.60 percent to 545.70/546.20 per dollar compared with Wednesday's close at 549.00/549.50.

"The market opened with strong profit-taking on dollars ahead of a certain 25-basis-point hike in the U.S. interest rate," a trader said. The Chilean currency exchange market closed before the U.S. Federal Reserve issued its statement.

Source