Most Brazilian stocks fell as Lojas Americanas SA led retailers lower amid speculation policy makers will step up the pace of interest rate increases. The Ibovespa closed little changed as a rally in commodity producers erased earlier losses in the index.
Homebuilder Rossi Residencial SA (RSID3) fell for the first time in four days. Lojas Americanas was the worst performer on the MSCI Brazil/Consumer Discretionary Index. Cosan SA Industria & Comercio slumped the most on the measure after quarterly profit missed estimates.
The Ibovespa rose less than 0.2 percent to 52,884.83 at the close of trading in Sao Paulo. Thirty-eight stocks fell while 30 rose. The index declined as much as 1.1 percent in intraday trading. The real dropped 0.1 percent to 2.1298 per dollar. The Standard & Poor’s GSCI index of 24 raw materials climbed 0.3 percent.
Quickening inflation and the prospect for higher interest rates create “a very negative scenario” for the stock market, Daniel Ribeiro, a trader at Corval Corretora de Valores SA, said in a phone interview from Belo Horizonte, Brazil. “Investors just don’t want to enter the market if the outlook for the companies is so negative.”
Wholesale, construction and consumer prices as measured by the IGP-DI index rose 0.32 percent last month, the Getulio Vargas Foundation reported. The median forecast of 24 economists surveyed by Bloomberg was for a 0.17 percent increase. Central bank policy makers said in minutes of their May meeting published today that it is “appropriate to intensify the pace of adjustment of current monetary conditions” to curb inflation.
The central bank raised the benchmark interest rate by a half-percentage point to 8 percent at its last meeting, surprising most economists who predicted an increase of a quarter-percentage point.
Lojas Americanas dropped 1.4 percent to 16.40 reais. Rossi sank 1.9 percent to 3.56 reais. The MSCI Brazil/Consumer Discretionary Index declined 0.4 percent.
Cosan slumped 4.6 percent to 43.90 reais, the biggest one-day drop since February 2012.
The Ibovespa (IBOV) reversed losses as commodity producers gained with global stocks before a report on U.S. employment growth tomorrow. The MSCI World Index advanced 0.3 percent after falling as much as 0.4 percent. Iron-ore producer erased a decline and rose 1.4 percent to 29.58 reais, contributing most to the Brazilian benchmark’s gain.
Vale “suffered a lot with the external instability, and now it’s rebounding,” Hamilton Moreira, a strategist at Banco do Brasil SA, said by phone from Sao Paulo. “It’s a momentary relief. We have an important day tomorrow, with the payroll data.”
Mining company MMX Mineracao & Metalicos SA gained 5.4 percent to 1.75 reais.
Freight transportation company ALL America Latina Logistica (ALLL3) gained after saying that it will take legal measures on revoked Argentine licenses.
ALL rose 1.2 percent to 10.88 reais. Argentina expropriated a cargo railway concession and a tourist train concession on June 4, citing noncompliance with contractual agreements. The Curitiba, Brazil-based company said in a regulatory filing yesterday after the market close that it will adopt all adequate measures to challenge the country’s decision to revoke its concessions.
Brazil’s benchmark equity gauge has slumped 13 percent this year, underperforming emerging markets including China, Russia and India, amid concern quickening inflation will curb the nation’s economic expansion.
The Ibovespa trades at 12.6 times analyst earnings estimates for the next four quarters, compared with a multiple of 10.4 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume for stocks in Sao Paulo was 7.39 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.71 billion reais this year through June 5, according to data compiled by the exchange.
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