Ibovespa Futures Decline After Index Advances Most in Six Weeks

Ibovespa futures dropped amid speculation that the equity index’s biggest gain in six weeks yesterday may have been excessive as the Brazilian economy showed signs of weakening.

Vale SA (VALE5), the world’s largest iron-ore producer, may move after Morgan Stanley raised it to the equivalent of buy. Smiles SA (SMLE3), the frequent-flier unit of Gol Linhas Aereas Inteligentes SA, may be active after posting fourth-quarter earnings that exceeded analysts’ forecasts.

Ibovespa futures contracts expiring this month declined 0.3 percent to 46,840 at 9:35 a.m. in Sao Paulo after the benchmark equity index jumped 1.8 percent yesterday. The real climbed 0.1 percent to 2.4033 per U.S. dollar today. The national statistics agency reported yesterday that Brazil’s industrial production fell in December by the most in five years.

“Economic data is still very weak, and in the short term it’s hard to believe that gains as big as yesterday’s will be the norm,” Alvaro Bandeira, a partner at Orama Asset Management, said in a telephone interview.

The Ibovespa has tumbled 17 percent from a bull-market high on Oct. 22 as inflation exceeded policy makers’ target for a third consecutive year and concern mounted that higher government spending will lead to a reduction in the country’s credit rating.

Trading volume of stocks in Sao Paulo yesterday was 7 billion reais, compared with a daily average of 6.28 billion reais this year, according to data from 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: Brendan Walsh at bwalsh8@bloomberg.net

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