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Ibovespa Drops as China Growth Concern Sinks Commodity Producers

The Ibovespa (IBOV) posted the biggest decline among stock indexes in the Americas as signs of slowing growth in China dimmed the outlook for commodity producers.

Petrochemicals maker Braskem SA (BRKM5) declined to a 13-month low, while iron-ore producer Vale SA contributed the most to a drop in the MSCI Brazil/Materials Index. Meatpacker JBS SA (JBSS3) fell after its Pilgrim’s Pride (PPC) unit offered to acquire Hillshire Brands Co. (HSH) for $5.6 billion.

The Ibovespa declined 1.4 percent to 52,172.36 today in Sao Paulo after closing yesterday at its highest level since May 19. The Standard & Poor’s GSCI Index of 24 raw materials dropped 0.5 percent as China’s Premier Li Keqiang said downward pressure on the Asian nation’s economy is “relatively large.” Commodity producers account for about one-third of the Ibvovespa’s weighting, data compiled by Bloomberg show.

“Commodity prices are falling again today on concern China’s growth will decelerate and uncertainty about its government measures,” Luis Morato, a senior trader at TOV Corretora, said by phone from Sao Paulo. “The slowdown should hurt Brazil’s exports.”

Braskem retreated 1.2 percent to 14.52 reais, the lowest since April 2013. The materials index slumped 1.6 percent as Vale sank 0.9 percent to 26.66 reais. JBS declined 4.2 percent to 7.56 reais.

Hyperinflation Case

Banks rose on speculation Brazil’s supreme court will delay a ruling tomorrow on a case in which depositors sued lenders over savings-account losses related to government policies to curb hyperinflation in the 1980s and 1990s.

“An eventual postponement would give banks a bit of a breather,” Morato said.

Brazil’s central bank and the attorney general sent the court a request today to suspend the ruling and open public hearings on the matter. Banco do Brasil SA advanced 0.6 percent to 22.58 reais, its highest since May 22.

The Ibovespa entered a bull market on May 7, surging 20 percent from this year’s low on March 14, as Petroleo Brasileiro SA rallied on speculation a change in government will reduce intervention in state-run companies.

Trading volume of stocks in Sao Paulo was 5.57 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 6.65 billion reais this year, according to data from the exchange.

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

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Dennis Fitzgerald

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