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Ibovespa Snaps Eight-Session Gain as Gafisa Leads Builders Lower

The Ibovespa fell for the first time in nine sessions, snapping its best winning streak in 19 months, as Gafisa SA (GFSA3) led homebuilders lower on speculation Brazilian policy makers may speed the pace of interest-rate increases.

Rossi Residencial SA (RSID3), the country’s worst-performing homebuilder in the past 12 months, retreated from a two-month high as swap rates, a gauge of expectations for borrowing costs, rose. The MSCI Brazil/Consumer Discretionary Index dropped the most among 10 industry groups.

The Ibovespa slid 0.7 percent to 51,199.94 at 10:53 a.m. in Sao Paulo. Fifty-three stocks sank on the measure while 17 rose. The real fell 0.2% to 2.3965 per dollar after earlier dropping 1 percent, paring its decline after the central bank intervened in the currency market.

“There was no change in the fundamentals of the Brazilian economy to sustain last week’s gains, and today we’re seeing a reversal,” Gustavo Mendonca, an economist at Saga Capital, said by phone from Rio de Janeiro. “With the currency getting weaker, the outlook for inflation is getting worse. I don’t see anything right now that could support equities.”

Brazilian swap rates on the contracts due in January 2015 climbed 11 basis points, or 0.11 percentage point, to 10.44 percent. Gafisa fell 2.8 percent to 3.15 reais. Rossi lost 2.7 percent to 3.12 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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