The Ibovespa retreated from a four-month high as Cyrela Brazil Realty SA led Brazilian homebuilders lower amid speculation recent gains might have been excessive given the outlook for slow economic growth.
The BM&FBovespa Real Estate Index dropped the most in three weeks, with Rossi Residencial SA and BR Properties SA also falling. State-run oil producer Petroleo Brasileiro SA snapped a five-session advance.
The Ibovespa lost 0.6 percent to 51,408.21 at the close of trading in Sao Paulo, with 53 stocks lower and 19 higher. The gauge rose the most among the world’s biggest equity indexes yesterday, pushing the ratio of price to forecast earnings on its members to 10.11, the highest since Jan. 3, according to data compiled by Bloomberg. The real fell 0.6 percent to 2.2814 per U.S. dollar at 5:23 p.m. local time.
“I don’t see much room for further gains, as nothing has changed when it comes to the economy,” Joao Pedro Brugger, who helps oversee 400 million reais as a portfolio manager at Leme Investimentos, said by phone from Florianopolis, Brazil. “Economic activity is still weak, and inflation continues to be an issue.”
Brazil’s gross domestic product will expand 1.69 percent this year after 2.28 percent growth in 2013, according to a central bank survey of about 100 economists published this week. Consumer prices will increase 6.3 percent, faster than the 4.5 percent midpoint of the government’s target range, the survey showed. Policy makers raised the benchmark lending rate yesterday to 11 percent to curb inflation while signaling they’re close to ending monetary tightening as growth falters.
Cyrela sank 4.9 percent to 13.32 reais, the worst performer on the Ibovespa. Banco BTG Pactual SA cut its recommendation to the equivalent of hold and lowered its earnings-per-share forecast for 2014 by 11 percent, according to a research note from analysts Marcello Milman and Gustavo Cambauva.
Rossi slipped 4.9 percent to 1.76 reais. BR Properties lost 2.1 percent to 18.47 reais.
Petrobras, as Petroleo Brasileiro is known, fell to 15.40 reais from 16.56 reais. The shares surged 15 percent in the previous five sessions, the biggest gain for such a period since 2008.
The Ibovespa entered a bear market March 14 after falling 20 percent from its October 2013 high through that day. The gauge has since gained 14 percent as state-owned companies including Centrais Eletricas Brasileiras SA rebounded.
Trading volume of stocks in Sao Paulo today was 6.95 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 6.51 billion reais this year, according to data from the exchange.