The Bovespa index fell for the first time in three days as petrochemicals maker Braskem SA led Brazilian material producers lower amid a drop in global commodities prices.
Steelmaker Usinas Siderurgicas de Minas Gerais SA fell to a three-month low. State-controlled crude producer Petroleo Brasileiro SA contributed the most to the benchmark’s decline. OGX Petroleo & Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, retreated after reporting a drop in average production at its main field.
The Bovespa slid 1.3 percent to 59,575.66 at the close of trading in Sao Paulo. Fifty-two stocks fell on the gauge while 16 advanced. The real dropped 0.4 percent to 1.9954 per dollar. The Standard & Poor’s GSCI index of raw materials lost 0.7 percent at 3:01 p.m. in New York, and the euro retreated as Spain’s Prime Minister Mariano Rajoy faced opposition calls to resign. Commodities producers account for about 43 percent of the Bovespa’s weighting.
“There’s still concern about Europe, and given the weighting that commodities have on the Bovespa, problems in the world economy end up pushing the Brazilian market lower,” Clodoir Vieira, an economist at brokerage Souza Barros Corretora in Sao Paulo, said in a phone interview.
Rajoy, facing opposition calls to resign amid contested reports about illegal payments, travels to Berlin today as euro-area leaders schedule a flurry of meetings this week ahead of a Feb. 7-8 European Union summit. In Italy, a Feb. 1 poll showed billionaire media magnate Silvio Berlusconi closing the gap with leader Pier Luigi Bersani to 5 percentage points. The surge by Italy’s former premier threatens Bersani’s ability to win a majority even if he remains ahead in the polls.
Braskem dropped 5.9 percent to 14.40 reais. Usiminas, as Usinas Siderurgicas is also known, fell 3.4 percent to 9.94 reais. Cia. Siderurgica Nacional SA slid 2.9 percent to 10.83 reais. Petrobras lost 2.5 percent to 18 reais.
OGX declined 3.1 percent to 4.02 reais. Average daily production per well at the company’s Tubarao Azul offshore field in the Campos Basin fell to 4,900 barrels of oil and natural gas in January, from 5,100 in December, OGX said today in a presentation.
Accelerating also pushed the Bovespa lower as concern mounts that Brazilian policy makers will have less room to keep stimulus in place to boost the economic recovery, said Fausto Gouveia, who helps manage 380 million reais at Legan Administracao de Recursos.
“Growth was terrible last year, and with inflation running at current levels, there’s nothing much the government can do now to speed up the recovery,” Gouveia said by phone from Sao Paulo.
Consumer prices in Sao Paulo as measured by the IPC-Fipe index rose 1.15 percent in January, a report today from the Foundation Economics Research Institute showed, which exceeded the median estimate of 1.06 percent among 13 economists surveyed by Bloomberg.
The Bovespa entered a bull market on Jan. 3 after rising 21 percent from last year’s low on June 5 as stimulus from central banks around the world eased concern that economic growth might miss expectations while borrowing costs at a record low in Brazil boosted equity demand. The index has since pared its advance to 14 percent.
The Brazilian equity gauge trades at 11 times analysts’ earnings estimates for the next four quarters, in line with MSCI’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume for stocks in Sao Paulo was 6.46 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.34 billion reais this year through Jan. 31, according to data compiled by the exchange.