The Ibovespa fell from a seven-month high as lower commodity prices sapped the outlook for Brazil’s raw-material exports amid concern growth in China will falter.
Iron-ore producer Vale SA, whose main export market is China, snapped a two-day gain. The MSCI Brazil/Materials index declined the most in six weeks. Banco Bradesco SA, Brazil’s second-biggest bank by market value, dropped after JPMorgan Chase & Co. cut it to the equivalent of hold. Pulp producer Fibria Celulose SA retreated after posting quarterly earnings that trailed analysts’ estimates.
The Ibovespa sank 1.8 percent to 55,440.03 at the close of trading in Sao Paulo, with 63 of its 73 member stocks lower. The real slid 0.7 percent to 2.1881 per dollar at 5:21 p.m. local time. The Standard & Poor’s GSCI index of 24 raw materials lost 1.4 percent. China’s benchmark money-market rate increased the most since July as the country’s central bank refrained from adding funds to markets. The Asian nation’s biggest banks also tripled the amount of bad loans written off in the first half, filings showed.
“News coming from China overnight wasn’t positive, which spurred some concern and is driving investors away from equities,” Daniel Cunha, the chief economist at brokerage XP Investimentos, said by phone from Sao Paulo. “It’s affecting assets linked to commodities. The Ibovespa is tracking this worsening in the external outlook today.”
The Bloomberg Base Metals 3-Month Price Commodity Index fell 1.8 percent. Vale lost 1.8 percent to 32.21 reais. Bradespar SA, which is part of the group that controls Vale, dropped 1.7 percent to 26.21 reais.
Commodity producers account for about 39 percent of the Ibovespa’s weighting. China is Brazil’s biggest trading partner.
Bradesco fell 2 percent to 32.40 reais. JPMorgan said there’s “limited upside potential” after the stock advanced 27 percent from this year’s low on July 8 through yesterday.
“Investors should take profits in Bradesco shares,” analysts including Saul Martinez wrote in a note to clients today. The stock’s “recent rally has left little upside.”
Fibria declined 1.9 percent to 27.80 reais.
The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 15 percent in dollar terms this year, compared with a decline of 2.1 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.
Trading volume of stocks in Sao Paulo today was 5.62 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 7.61 billion reais this year through Oct. 21, according to data from the exchange.