Bovespa-Index Futures Tumble on Inflation, Interest-Rate Outlook
Bovespa-index futures fell after a report that showed Brazilian consumer prices rose more than forecast this month prompted traders to pare bets for lower borrowing costs, dimming the outlook for companies that depend on domestic demand.
Vehicle-parts maker Iochpe-Maxion SA (MYPK3) may be active after Credit Suisse Group AG cut its recommendation to “neutral” from “outperform.” Retailers Marisa Lojas SA (AMAR3) and Cia. Hering (HGTX3) may move after each was rated “overweight” in new coverage at Barclays Capital.
Bovespa futures dropped 0.3 percent to 66,745 at 10:22 a.m. in Sao Paulo. The real strengthened 0.3 percent to 1.7007 per U.S. dollar.
Consumer prices as measured by the IPC-S index rose 0.27 percent in the 30 days through yesterday, from 0.30 percent in the previous period, according to a report today from the Rio de Janeiro-based Getulio Vargas Foundation. Inflation was expected to slow to 0.22 percent, the median estimate of 11 economists surveyed by Bloomberg.
“The equity market has benefited from bets for lower interest rates in the past few weeks, but now there seems to be a correction following the IPC-S report,” Luciano Rostagno, chief strategist with Banco WestLB do Brasil SA, said by phone from Sao Paulo.
Yields on Brazilian interest-rate futures advanced after the report was released. The yield on the contract due in January 2013 rose two basis points, or 0.02 percentage point, to 9.22 percent.
Relative Value
The Bovespa has advanced 16 percent this year, after slumping 18 percent in 2011, buoyed by Brazil’s interest-rate cuts, signs of growth in the U.S. and renewed optimism Europe may be closer to solving its debt crisis. The gauge trades at 10.6 times analysts’ earnings estimates, compared with a 10.7 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.
Traders moved 5.29 billion reais ($3.11 billion) in stocks in Sao Paulo yesterday, data compiled by Bloomberg show. That compares with a daily average of 6.97 billion reais this year through Feb. 13, according to data from the exchange.
To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net
To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net
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