Ibovespa Futures Decline as Brazil Inflation Exceeds Estimates

Ibovespa futures fell, a sign the gauge may extend a weekly drop, after inflation in Brazil exceeded estimates.

State-controlled oil company Petroleo Brasileiro SA (PETR3) may be active after Folha de S. Paulo reported that the cancellation of a debt certificate is preventing the company from importing and exporting fuel. Insurance company BB Seguridade Participacoes SA (BBSE3) may move after Itau BBA recommended investors buy the stock.

Ibovespa futures contracts expiring in August dropped 0.4 percent to 50,405 at 9:19 a.m. in Sao Paulo. The real weakened 0.3 percent to 2.1271 per dollar.

Brazil’s inflation as measured by the IGP-10 index was 0.6 percent in June, Getulio Vargas Foundation said today. That compares with a median estimate of 0.45 percent among 22 analysts surveyed by Bloomberg. The benchmark Ibovespa index is poised for its third weekly decline with a retreat of 2.3 percent over the past four days.

The Ibovespa has slumped 20 percent from this year’s peak in January on speculation accelerating inflation may curb Brazil’s economic recovery and the government’s interventionist policies will hurt profits in industries including utilities and energy.

Brazil’s benchmark equity gauge trades at 12 times analysts’ earnings estimates for the next four quarters, compared with a multiple of 10.2 for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume for stocks in Sao Paulo was 8 billion reais ($3.8 billion) yesterday, compared with a daily average of 7.9 billion reais this year through June 13, according to data compiled by the exchange.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

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

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