The Ibovespa sank to the lowest since July as raw-material exporters including Vale SA tumbled amid concern that growth is slowing in China, Brazil’s biggest trading partner.
Usinas Siderurgicas de Minas Gerais SA led steelmakers lower as the MSCI Brazil/Materials Index fell the most among 10 industry groups. Retailer Lojas Americanas SA slipped to a two-week low as faster-than-forecast inflation stoked concern that policy makers will keep raising interest rates.
The Ibovespa slipped 1.5 percent to 45,533.20 at the close of trading in Sao Paulo. Fifty-eight stocks fell while 15 advanced. The real fell 0.5 percent to 2.3523 per U.S. dollar at 5:25 p.m. local time. Iron ore for immediate delivery slumped 8.3 percent, according to prices compiled by The Steel Index Ltd., as China’s exports declined last month the most since 2009.
“The data about China’s economy have been indicating a deceleration, and today’s number reinforces that perception from investors,” Eduardo Velho, the chief economist at INVX Global Partners in Sao Paulo, said in a phone interview. “And that’s very negative for commodity producers that sell to the country, especially Brazilian iron-ore companies and steelmakers.”
Commodity producers account for 35 percent of the Ibovespa’s weighting, according to data compiled by Bloomberg. Vale, the world’s largest iron-ore producer, dropped 2.7 percent to 26.37 reais, contributing the most to the Ibovespa’s decline. Usiminas, as Usinas Siderurgicas is known, sank 4.1 percent to 8.72 reais.
Swap rates, a gauge of expectations for interest-rate moves, climbed on most contracts after a report showed inflation accelerated more than forecast in February.
“The decline in commodities prices means that the scenario for exports is not good for Brazil, but the domestic situation is not positive either,” Alvaro Bandeira, a partner at Orama Asset Management, said by phone from Rio de Janeiro. “Inflation is still high and analysts expect the country to grow less.”
Wholesale, construction and consumer prices rose 0.85 percent in February after climbing 0.4 percent in the prior month, the Getulio Vargas Foundation reported today. The median forecast of economists surveyed by Bloomberg was for a 0.65 percent increase. Analysts surveyed by the central bank lowered their growth projection for Latin America’s largest economy in 2014 to 1.68 percent from 1.70 percent a week earlier.
Lojas Americanas fell 0.2 percent to 14.24 reais after paring earlier decline of as much as 2 percent.
The Ibovespa has tumbled 19 percent from a bull-market high on Oct. 22 as inflation exceeded policy makers’ target and concern mounted that higher government spending will lead to a reduction in the country’s credit rating.
Trading volume of stocks in Sao Paulo was 6.53 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 6.35 billion reais this year, according to data from the exchange.