The Ibovespa posted its first weekly drop since mid-March as Cia. Hering led a decline among consumer stocks, tumbling to the lowest since 2010 after its quarterly profit trailed analysts’ estimates.
Iron-ore producer Vale SA contributed the most to the benchmark index’s decline as commodities dropped. Petroleo Brasileiro SA, the state-run oil company known as Petrobras, sank for the first time in three days. ALL-America Latina Logistica SA was the best performer on the gauge after JPMorgan Chase & Co. recommended buying the train operator’s shares.
The Ibovespa retreated 1.4 percent this week to 51,399.35 at the close of trading in Sao Paulo and sank 0.8 percent today. The real lost 1.3 percent to 2.2428 per U.S. dollar at 5:23 p.m. local time. The MSCI Brazil/Consumer Discretionary Index decreased 1.1 percent to a four-week low.
“Consumer goods companies did very well in past years but will probably continue to suffer now as interest rates rise in Brazil and families become more indebted,” Alvaro Bandeira, a parter at Orama Asset Management, said in a telephone interview from Rio de Janeiro. “They are not investors’ favorites anymore.”
Policy makers have lifted Brazil’s target lending rate nine consecutive times in the past year to 11 percent to curb inflation. Average household debt as of February was 45.9 percent of 12-month total income, compared with 36.1 percent in the same month in 2010, according to data compiled by the central bank.
Hering slumped 3.5 percent to 23.94 reais, the lowest since September 2010. The company reported first-quarter adjusted net income of 64.6 million reais, according to data compiled by Bloomberg. That compares with an average estimate of 71.3 million reais among five analysts surveyed by Bloomberg.
Hering’s competitor Lojas Renner SA sank 0.6 percent to 62.63 reais. Cia. Brasileira de Distribuicao dropped 1 percent to 104.70 reais.
Vale fell 2.3 percent to 27.50 reais. Petrobras slid 0.6 percent to 16.03 reais. West Texas Intermediate crude declined 1.3 percent to $100.63 a barrel. The Standard & Poor’s GSCI index of 24 raw materials retreated 0.6 percent. Commodity producers account for about one-third of the Ibovespa’s weighting. ALL added 4.9 percent to 8.85 reais.
The Ibovespa entered a bear market March 14 after falling 20 percent from its October 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 5.41 billion reais, according to data compiled by Bloomberg. That compared with a daily average of 6.73 billion reais this year, according to data from the exchange.