Ibovespa Declines to Three-Month Low as Brazil’s Economy Shrinks

The Ibovespa fell to a three-month low as Rossi Residencial SA (RSID3) led a decline among homebuilders after a report showed Brazil’s economy contracted more than analysts forecast in the third quarter.

Cosmetics maker Natura Cosmeticos SA (NATU3) was the worst performer on the MSCI Brazil/Consumer Staples index. Steelmakers Usinas Siderurgicas de Minas Gerais SA and Gerdau SA (GGBR4) followed metals lower. State-run oil company Petroleo Brasileiro SA contributed the most to the Ibovespa’s decline.

Brazil’s benchmark equity index sank 1 percent to 50,727.60 at 10:40 a.m. in Sao Paulo, with all 72 of its members lower. The real weakened 0.3 percent to 2.3611 per U.S. dollar. Latin America’s largest economy contracted 0.5 percent in the third quarter from the previous three months, the national statistics agency said. The median forecast of economists surveyed by Bloomberg was for a 0.3 percent decline.

“It’s hard to imagine why people will turn to equities given how things are going in Brazil,” Fausto Gouveia, who helps manage 500 million reais at Legan Administracao de Recursos, said in a phone interview. “It’s not just the numbers themselves, but it’s also this feeling that the government is completely lost when it comes to its macroeconomic policies.”

Rossi fell 2.9 percent to 2 reais. Natura lost 1.6 percent to 42.33 reais. Usiminas, as Usinas Siderurgicas is known, declined 1.7 percent to 12.17 reais. Gerdau slid 0.7 percent to 17.96 reais. Petrobras declined 1.4 percent to 17.12 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: Brendan Walsh at bwalsh8@bloomberg.net

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