The Ibovespa fell the most in three weeks as speculation mounted that the Federal Reserve will soon reduce a stimulus program that has helped buoy demand for emerging-market assets including Brazilian stocks.
Real estate company BR Properties SA sank to a four-week low after posting second-quarter earnings that missed analysts’ estimates. Steelmaker Usinas Siderurgicas de Minas Gerais SA led losses by raw-material producers as commodities dropped. Oil producers Petroleo Brasileiro SA and OGX Petroleo & Gas Participacoes SA slumped with crude.
The Ibovespa sank 2.1 percent to 47,421.85 at the close of trading in Sao Paulo with 64 stocks lower and seven higher. The real climbed 0.4 percent to 2.2970 per dollar at 5:25 p.m. local time. U.S. stocks retreated as Fed Bank of Chicago President Charles Evans told reporters today that he wouldn’t rule out a decision to cut monetary stimulus next month if the labor market keeps improving.
“What we see in the U.S. is signs that the economy is picking up, which could mean that the Fed will soon start cutting back stimulus,” Fernando Goes, an analyst at Sao Paulo-based brokerage Clear Corretora, said in a telephone interview. “For Brazil, less liquidity in the world would only mean reduced flow to equities.”
Evans’s comments came a day after Fed Bank of Dallas President Richard Fisher, one of the most vocal critics of quantitative easing, said the central bank is closer to slowing its $85 billion in monthly bond buying.
BR Properties lost 3 percent to 18.51 reais. The company posted adjusted net income of 49.2 million reais in the second quarter, trailing an average estimate among analysts of 66.4 million reais, according to data compiled by Bloomberg. Fourteen of the 24 Ibovespa members that have reported earnings missed forecasts, according to data compiled by Bloomberg.
Usiminas, as Usinas de Minas Gerais is also known, sank 3 percent to 8.61 reais. Petroleo Brasileiro fell 2.2 percent to 16.28 reais. OGX slumped 3.3 percent to 58 centavos.
Retailer Guararapes Confeccoes SA, which owns the Riachuelo apparel chain in Brazil, rose 4.3 percent to 86.99 reais, its biggest one-day gain this year, after posting earnings that beat analysts’ forecasts.
Light, Direcional Engenharia
Electricity distributor Light SA slumped 3.3 percent to 16.91 reais, the biggest one-day drop in six weeks, after the regulator known as Aneel said that it may tell the company to lower rates by 3.3 percent. The proposal will be submitted to public hearings and a final decision should be reached in November, according to Aneel.
Homebuilder Direcional Engenharia SA tumbled 5.4 percent to 12.15 reais. The company posted adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, of 83.8 million reais in the second quarter, missing the average forecast of 86.3 million reais among five analysts surveyed by Bloomberg.
The Ibovespa slumped 21 percent this year through yesterday, wiping out $248 billion from the value of Brazilian stocks, according to data compiled by Bloomberg. The gauge trades at 11.5 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 in Sao Paulo was 6.5 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.61 billion reais this year through Aug. 2, according to data compiled by the exchange.