The Ibovespa rebounded from a six-week low as mining company Vale SA led Brazilian raw-material producers higher amid a rally in commodities, outweighing declines in bank stocks.
MMX Mineracao & Metalicos SA, the iron-ore producer controlled by billionaire Eike Batista, rose from a record low. The MSCI Brazil/Materials Index was the best performer among 10 industry groups. Banco Bradesco SA sank after economists lowered their 2013 economic growth forecasts for a third week.
The Ibovespa gained 0.8 percent to 53,944.36 at the close of trading in Sao Paulo. Forty-one stocks rose while 30 fell. The real climbed 0.8 percent to 2.1241 per dollar. The Standard & Poor’s GSCI index of 24 raw materials rose 1.2 percent. Brazil’s benchmark equity gauge sank 2.1 percent on May 31 after policy makers increased Brazil’s target lending rate more than most analysts had forecast to curb inflation.
“The market reaction on Friday to the increase in interest rates was exaggerated,” Marcio Cardoso, a partner at brokerage Titulo Corretora de Valores SA, said by phone. “The signal the central bank sent was good.”
Vale jumped 4.5 percent to 29.95 reais. MMX rose 2.4 percent to 1.72 reais.
Bradesco slid 2.8 percent to 33.37 reais. The MSCI Brazil/Financials Index fell 1.7 percent, the lowest closing level since Dec. 18.
Gross domestic product will expand 2.77 percent this year, down from the previous week’s forecast of 2.93 percent, according to a May 31 central bank survey of about 100 economists published today. Analysts also cut their 2014 growth outlook to 3.4 percent from 3.5 percent.
“The short term for the Brazilian economy is bad and that reflects on stocks,” Felipe Rocha, an analyst at brokerage Omar Camargo, said in a telephone interview from Curitiba, Brazil. “The market is redoing the math on growth forecasts. For banks, it brings the prospect of less demand for credit and an overall slower market.”
Banco Itau BBA joined analysts from Bradesco BBI to JPMorgan Chase & Co and cut its 2013 growth forecast for Brazil after first-quarter expansion trailed estimates. Itau predicts Latin America’s largest economy will grow 2.4 percent this year, according to a research report today, down from a previous estimate of 2.8 percent.
Airline Gol Linhas Aereas Inteligentes SA, which got 93 percent of its revenue from Brazil in 2012, slumped 3.9 percent to 8.95 reais, the lowest since Aug. 2.
Brazil’s benchmark equity gauge fell 4.3 percent in May, the steepest monthly drop in a year and its fifth straight month of declines. The index has fallen 12 percent in 2013, underperforming emerging markets including China, Russia and India, amid concern quickening inflation will curb the nation’s economic recovery.
The Ibovespa trades at 12.8 times analyst earnings estimates for the next four quarters, compared with a multiple of 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 7.66 billion reais today, data compiled by Bloomberg shows. That compares with a daily average of 7.76 billion reais this year through May 31, according to data compiled by the exchange.