Bovespa Falls to Eight-Month Low on Brazil Rate Forecasts

The Bovespa index fell to an eight- month low as retailer Cia. Hering (HGTX3) led losses by companies linked to domestic demand after economists covering Brazil raised their forecasts for the benchmark lending rate.

Homebuilders including PDG Realty SA Empreendimentos & Participacoes (PDGR3) and MRV Engenharia & Participacoes SA (MRVE3) also fell after a central bank survey showed the median forecast for the year-end Selic rate among about 100 economists rose to 8.50 percent from 8.25 percent.

The Bovespa fell 0.5 percent to 54,985.97 at 12:27 p.m. in Sao Paulo. A close at that level would be the lowest since July 26. Forty-six stocks advanced on the gauge while 21 retreated. The real weakened 0.3 percent to 2.0163 per dollar.

“The central bank won’t be able to delay rate increases much longer, which surely won’t make the environment for the stock market any better,” Clodoir Vieira, an economist at Sao Paulo-based brokerage Souza Barros Corretora, said in a phone interview.

Annualized inflation in the month through mid-March accelerated for a sixth straight month to 6.43 percent, a report from the national statistics agency showed last week. The central bank targets inflation of 4.5 percent, plus or minus 2 percentage points.

Hering lost 2 percent to 36.90 reais. MRV dropped 1.5 percent to 8.57 reais. PDG declined 2.8 percent to 2.77 reais.

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 at papadopoulos@bloomberg.net

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