Ibovespa Futures Drop After Bigger Than Expected Rate Rise

Ibovespa futures fell, signaling Brazilian stocks are headed for their fifth straight month of losses, after the nation’s central bank raised its target lending rate more than economists forecast.

Oil producer Petroleo Brasileiro SA may move after the company said production dropped in March. Petrochemicals maker Braskem SA may be active after Bradesco BBI raised its recommendation on the stock to outperform. OGX Petroleo & Gas Participacoes SA may move after Eike Batista said on Twitter that the oil company will present its business plan “soon.”

Ibovespa futures contracts expiring in June fell 0.3 percent to 54,470 at 9:23 a.m. in Sao Paulo. The Standard & Poor’s GSCI index of 24 raw materials dropped 0.4 percent, falling a third day. The real lost 0.5 percent to 2.1214 per dollar.

Brazil’s central bank board voted unanimously on May 29 to raise the benchmark Selic rate by a half-percentage point to 8 percent even as first-quarter growth trailed estimates. The decision surprised 38 of 57 economists surveyed by Bloomberg, who had expected a second straight increase of a quarter-percentage point. The other 19 correctly forecast the half-point increase.

The Ibovespa has fallen 2.3 percent in May, set for a fifth straight monthly drop, the worst losing streak since September 2011. The gauge has declined 10 percent this year, underperforming emerging markets including China, Russia and India, amid concern quickening inflation will curb the nation’s economic recovery.

Brazil’s main equity index trades at 13 times analyst earnings estimates for the next four quarters, compared with a multiple of 10.8 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.

To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.