Brazil’s Ibovespa Futures Drop as U.S. Outlook Curbs Risk Demand

Ibovespa futures declined as concern that a political deadlock in the U.S. will delay an increase in the country’s debt ceiling curbed investor demand for riskier assets including Brazilian stocks.

OGX Petroleo e Gas Participacoes SA may move after the oil producer hired Lazard Ltd. to advise on a new business plan. Education company Abril Educacao SA (ABRE11) may be active after saying it plans over the next year to buy back as much of 3 percent of its outstanding shares. Tim Participacoes SA (TIMP3) may move after Banco Santander SA lowered the wireless phone carrier to hold.

Ibovespa futures contracts expiring in October retreated 0.2 percent to 54,130 at 9:28 a.m. in Sao Paulo. The real weakened 0.3 percent to 2.2073 per dollar.

“Investors are worried that we may be standing before another crisis in the U.S.,” Darwin Dib, the chief economist at CM Capital Markets Asset Management, wrote in a note to clients today. “The Ibovespa may fall due to increased risk aversion in the global markets.”

U.S. Treasury Secretary Jacob J. Lew said yesterday investor confidence that a deal can be struck to raise the debt limit is “a bit greater than it should be.” The debt ceiling may be reached some time after the middle of next month, according to the Treasury Department.

The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 17 percent in dollar terms this year, compared with a decline of 4.5 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo yesterday was 6.12 billion reais, compared with a daily average of 7.72 billion reais this year through Sept. 23, according to data compiled by the exchange.

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

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.