The Ibovespa fell the most in three months as lower commodity prices pushed materials stocks including pulp producer Fibria Celulose SA lower.
Commodities producers sank amid concern the U.S. government is heading for a shutdown over a budget stalemate and after data showed manufacturing in China increased less than analysts forecast in September. OGX Petroleo e Gas Participacoes SA tumbled to a record after people with direct knowledge of the matter said it plans to miss a $44.5 million payment on dollar bonds scheduled for tomorrow.
The Ibovespa declined 2.6 percent to 52,338.19 at the close of trading in Sao Paulo, the most since July 2. Sixty-two stocks fell on the gauge while 10 gained. It was the fifth straight daily decline, the longest losing streak in six months. The index has advanced 10 percent since the end of June, the biggest quarterly jump in 18 months. The real climbed 1.5 percent to 2.2176 per dollar today. The Standard & Poor’s GSCI index of 24 raw materials lost 0.6 percent.
“Budget talks in the U.S. are the main event today, but we also had weak economic data in China,” Gustavo Mendonca, who helps manage 1 billion reais as an economist at Saga Capital, said by phone from Rio de Janeiro. That “points to increased risk aversion in the global markets, which pushes Brazilian equities lower.”
U.S. lawmakers would have to approve emergency legislation by midnight to keep the federal government operating tomorrow, the beginning of the 2014 fiscal year. Failure to do so may result in as many as 800,000 federal employees being placed on temporary unpaid leave.
In China, the Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics rose to 50.2 in September from 50.1 in August. The final number was less than last week’s 51.2 preliminary reading, which was the median estimate among economists surveyed by Bloomberg.
Iron-ore producer Vale SA, whose biggest export market is China, fell 1.9 percent to 31.54 reais. Fibria retreated 4.6 percent to 25.47 reais, the worst performance on the MSCI Brazil/Materials index.
OGX slumped 25 percent to 21 centavos. The company will file for bankruptcy protection in two weeks, Veja magazine reported on Sept. 28 without saying where it got the information. OGX’s press office didn’t respond to phone calls and e-mails from Bloomberg News seeking comment.
Plane builder Embraer SA fell 4.2 percent to 17.82 reais as a stronger real dimmed the outlook for sales abroad. Gafisa SA slipped 4.3 percent to 3.58 reais, leading losses in real estate companies, after the Brazilian central bank raised its forecast for 2014 inflation.
“In moments like now monetary policy must remain particularly vigilant to minimize the risk that high inflation rates, as observed during the last 12 months, persist,” policy makers said in the central bank’s quarterly inflation report published today.
The Ibovespa entered a bull market Sep. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 21 percent in dollar terms this year, compared with a decline of 6.4 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.
Trading volume of stocks in Sao Paulo was 7.2 billion reais ($3.3 billion) today, data compiled by Bloomberg show. That compares with a daily average of 7.71 billion reais this year through Sept. 24, according to data compiled by the exchange.