Bovespa-index futures dropped after Citigroup Inc. lowered its forecast for Brazil’s benchmark equity gauge, citing the outlook for inflation and growth in Latin America’s largest economy.
Clothing retailer Cia. Hering may be active after Banco Santander raised its recommendation to buy. OGX Petroleo & Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, may move after Standard & Poor’s cut its credit rating to B- from B and said it may downgrade the producer again this year if it doesn’t make progress toward improving liquidity.
Bovespa-index futures contracts expiring this month fell 0.2 percent to 55,490 at 9:17 a.m. in Sao Paulo. The real gained 0.2 percent to 2.0205 per dollar.
Citigroup lowered its year-end forecast for the Bovespa to 65,000 from 70,000, according to a research note sent to clients. The gauge closed up 1.2 percent at 55,562.74 yesterday.
“The macro framework is indecisive and inflation too high; growth is anaemic,” Stephen Graham, a Sao Paulo-based analyst, and Nicolas Riva, based in New York, wrote. “We do believe business reality on the ground is better than the prevailing market mood, but the uphill struggle to change the mood keeps getting steeper.”
The Bovespa has retreated 12 percent from this year’s high on Jan. 3 amid concern accelerating inflation may curb Brazil’s economic recovery and the government’s interventionist policies will hurt profits in industries including utilities and energy. The MSCI BRIC Index of shares in Brazil, Russia, India and China has lost 7.8 percent over the same period.
Brazil’s benchmark equity gauge trades at 11.1 times analysts’ earnings estimates for the next four quarters, compared with 10.5 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume for stocks in Sao Paulo was 7.35 billion reais ($3.6 billion) yesterday, which compares with a daily average of 7.46 billion reais this year through April 2, according to data compiled by the exchange.