Vale SA, the world’s largest iron-ore producer, extended a four-day tumble on speculation that Chinese demand for the steelmaking ingredient will slow further. The Ibovespa led declines in the Americas.
The miner has joined a slide in the commodity, which dropped the most in seven weeks Wednesday amid concern that a slowdown in Chinese steel consumption will deepen a global glut. Banks including Goldman Sachs Group Inc. are predicting that the weaker appetite from the world’s largest metals buyer will keep dragging down prices for the commodity.
“We really don’t see those prices improving, and that should weigh on Vale,” Luis Gustavo Pereira, an analyst at brokerage Guide Investimentos, said by phone from Sao Paulo. “The stock is sinking the Ibovespa, which is already slumping with so many economic uncertainties.”
Brazilian equities have dropped 8.3 percent from this year’s high as data added to forecasts Latin America’s largest economy will post the worst recession in 25 years. The benchmark stock gauge had entered a bull market in April, after rallying more than 20 percent from its 2015 low, on bets government measures to shore up the budget would help Brazil keep its investment-grade credit rating.
The Ibovespa fell 0.8 percent to 53,248.54 at the close of trading in Sao Paulo. Stocks briefly pared losses as the Federal Reserve signaled the pace of tighter monetary policy will be gradual even as the central bank prepares to lift interest rates this year.
Vale extended a four-day slide to 6.5 percent. Itau Unibanco Holding SA, Latin America’s largest bank by market value, and Banco Bradesco SA led losses among financial shares.
Options on the gauge expired Wednesday.