The Ibovespa fell a second day as Brazilian homebuilders sank after a report showing consumer prices increased more than forecast revived speculation that policy makers will keep raising borrowing costs.
Rossi Residencial SA was the worst performer on the BM&FBovespa Real Estate Index. Voting shares of Centrais Eletricas Brasileiras SA, the state-run utility known as Eletrobras, slumped the most in a year. Usinas Siderurgicas de Minas Gerais SA fell after JPMorgan Chase & Co. cut the steelmaker to the equivalent of hold.
The Ibovespa slipped 0.9 percent to 51,185.40 at the close of trading in Sao Paulo, with 52 of its 73 members lower. The real gained 0.2 percent to 2.1968 per U.S. dollar at 5:21 p.m. local time. Swap rates, a gauge of expectations for interest-rate moves, climbed as the national statistics agency reported that Brazil’s consumer prices rose 6.15 percent in the 12 months through March, faster than all of the forecasts of economists surveyed by Bloomberg.
“We haven’t seen any consistent signs that the Brazilian economy is in fact improving,” Marc Sauerman, a portfolio manager at J. Malucelli Investimentos, said by phone from Curitiba, Brazil. “Equities have rebounded in the past few weeks, but that doesn’t mean that the outlook for Brazil has improved.”
The Ibovespa has gained 14 percent from this year’s low on March 14 as state-controlled companies surged amid speculation that President Dilma Rousseff will lose her re-election bid.
“Even if she wins, we expect her to implement more investor-friendly policies,” Tony Volpon, the head of emerging-market research at Nomura Holdings Inc., wrote in a research note today. “A second Rousseff administration will face a much less liquid global environment. This will work to discipline policy choices.”
Rossi dropped 4.4 percent to 1.72 reais. The BM&FBovespa Real Estate Index sank 1.9 percent. Eletrobras dropped 6.6 percent to 6.82 reais. The stock is up 16 percent this year.
Usiminas, as Usinas Siderurgicas is known, fell 6.3 percent to 8.99 reais today.
“We are growing worried about flat steel demand in Brazil,” JPMorgan analysts wrote in a research note, citing signs that car sales in Latin America’s largest economy are weakening. A stronger real also makes competition from steel imports tougher, JPMorgan says.
Cia. Siderurgica Nacional SA decreased 5.2 percent to 9.11 reais. Brazil’s antitrust regulator today said the company, which held in excess of 17 percent in Usiminas, must reduce its holding.
The real has gained 7.5 percent this year, the most among 16 major dollar counterparts tracked by Bloomberg.
Trading volume of stocks in Sao Paulo was 7.6 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 6.6 billion reais this year, according to data from the exchange.