The Ibovespa fell, snapping a winning streak that sent valuations to a six-month high, as Vale SA dropped and a report showed Latin America’s biggest economy shrank in April from a year earlier.
Gafisa SA was the worst performer among homebuilders amid concern that stalled growth will limit demand. Vale contributed the most to the benchmark stock index’s decline as iron-ore prices slumped.
The Ibovespa slid 0.5 percent to 54,806.64 at the close of trading in Sao Paulo, trimming this week’s gain to 3.2 percent. Polls showing less support for President Dilma Rousseff helped fuel a four-day advance before yesterday’s holiday that drove the gauge’s valuation to 10.74 times forecast earnings, the highest since Nov. 29, according to data compiled by Bloomberg.
“Stocks have jumped on signs that opposition to the current administration is gaining support, but further gains will depend on something new coming up,” Raphael Figueredo, an analyst at Clear Corretora, said in a phone interview. “After the recent rally, many people are waiting on the sidelines for more news on the election front.”
The slowest growth in more than two decades and almost four years of above-target inflation have eroded Rousseff’s popularity since late March. She would have 38 percent of the votes in October’s election, according to a June 4-7 Ibope poll published this week, compared with 40 percent in May.
The national statistics agency reported yesterday that retail sales dropped 0.4 percent in April from a month earlier, more than economists had predicted. The central bank said today that its economic activity index, a proxy for gross domestic product, fell 2.29 percent in April from a year earlier.
The Ibovespa entered a bull market on May 7, surging 20 percent from this year’s low, as Petroleo Brasileiro SA rallied on speculation a change in government will reduce intervention in state-run companies.
Vale fell 2.5 percent to 25.75 reais today in the biggest drop in two weeks. Iron ore with 62 percent iron content delivered to the port of Tianjin, China, declined 0.7 percent to $90.90 a dry ton today, the lowest since September 2012, according to The Steel Index Ltd.
Airline Gol Linhas Aereas Inteligentes SA tumbled 3.9 percent, the most in two weeks, to 12.57 reais. Higher oil prices that followed the Islamist insurgency in Iraq may spur “significant increases in jet fuel” costs, Bernardo Velez, an analyst at brokerage GBM Grupo Bursatil Mexicano SA, wrote in a research note to clients.
Gafisa declined 4.7 percent to 3.22 reais.