The Ibovespa dropped for a second consecutive session as economists covering Brazil raised their inflation forecasts, adding to concern that eroded purchasing power will discourage consumers from shopping at retailers.
Online seller B2W Cia. Digital retreated from a one-week high. Petroleo Brasileiro SA, the oil producer known as Petrobras, fell after Credit Suisse Group AG said in a report that gasoline imports are becoming more expensive as the real weakens. Banco do Brasil SA sank the most in a month, leading banks lower. Hypermarcas SA rose as the consumer-health products manufacturer’s second-quarter profit beat analysts’ estimates.
The Ibovespa fell 0.1 percent to 48,436.44 at the close of trading in Sao Paulo. Thirty-one stocks fell on the benchmark index while 36 advanced. The real slid 0.7 percent to 2.3032 per dollar at 5:38 p.m. local time. A central bank survey of about 100 economists released today showed the median estimate for Brazil’s inflation rate in the next 12 months increased to 5.93 percent from 5.83 percent.
“If you take into account only the state of the Brazilian economy, it’s hard to see the Ibovespa going much higher,” Pedro Galdi, the chief strategist at Sao Paulo-based brokerage SLW Corretora, said in a phone interview. “As for Petrobras, I don’t see fuel prices rising anytime soon, given that inflation is already at the upper limit of the government’s target.”
State-controlled Petroleo Brasileiro, whose chairman is Finance Minister Guido Mantega, fell 1 percent to 16.65 reais. International gasoline prices are 30 percent higher than those charged in Brazil, Credit Suisse’s economists including Nilson Teixeira wrote in a research note Aug. 2.
The oil company imports some of the fuel it sells in Brazil, and a widening gap between local and international prices may hurt earnings, Galdi said.
Consumer prices in Latin America’s largest economy increased 6.7 percent in June from a year earlier, exceeding the 6.5 percent of the upper limit of the central bank’s target, according to the national bureau of statistics.
B2W slumped 3.2 percent to 11.21 reais. Hypermarcas increased 1.9 percent to 16.90 reais. Banco do Brasil lost 2.6 percent to 22.21 reais.
The Ibovespa declined 20 percent this year through August 2, wiping out $232 billion from the value of Brazilian stocks, according to data compiled by Bloomberg. The index trades at 11.8 times analysts’ earnings estimates for the next four quarters, compared with 10.4 for the MSCI Emerging Markets Index of 21 developing nations’ equities.
Trading volume of stocks in Sao Paulo was 4.63 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.63 billion reais this year through July 31, according to data compiled by the exchange.