Ibovespa Drops Third Day as Brazilian Inflation Concern Saps B2W

The Ibovespa benchmark declined for a third day as online retailer B2W Cia. Digital led consumer stocks lower amid concern that a weaker Brazilian currency will fuel inflation.

Beef producer Minerva SA sank after Bank of America Corp. cut the stock to the equivalent of hold as earnings trailed estimates. Iron-ore mining company Vale SA contributed the most to the equity gauge’s decline as raw-material prices slumped. Commodities producers account for about 41 percent of the Ibovespa’s weighting.

Brazil’s main equity measure dropped 0.6 percent to 55,107.80 at the close of trading in Sao Paulo. The gauge is down 0.7 percent this week. Forty-two of the 71 stocks on the index dropped today. The real weakened 0.3 percent to 2.0204 per dollar, leaving it down 3.3 percent over the past 12 months.

“Brazilian stocks are out of favor among investors, given all the problems you have in the economy, such as inflation,” Alvaro Bandeira, a partner at Orama Asset Management, said by phone from Rio de Janeiro. “A weaker real will put pressure on inflation that’s already running fast, which is a problem.”

Consumer prices as measures by the IPCA index increased 6.49 percent in the 12 months ending in April, faster than economists had forecast, according to a report from the national statistics agency on May 8. The central bank last month increased the benchmark lending rate for the first time since July 2011 in an attempt to rein in prices.

B2W, Minerva

B2W sank 7.7 percent to 10.85 reais. The company reported that its net loss more than doubled in the three months through March to 106.3 million reais, according to data compiled by Bloomberg. Of 43 companies on the Ibovespa that already reported first-quarter earnings, 24 trailed estimates.

Brazilian swap rates on the contract due in January 2015 rose 11 basis points, or 0.11 percentage point, to 8.35 percent amid speculation that a weaker real will prompt the central bank to raise interest rates at a faster pace.

Minerva tumbled 3.6 percent to 11.47 reais, its biggest drop in two weeks. The company’s adjusted net income was 5.57 million reais in the first quarter, below the average estimate of 16.6 million reais among seven analysts surveyed by Bloomberg.

Vale fell 2 percent to 32.50 reais. Steelmaker Usinas Siderurgicas de Minas Gerais SA sank 2.8 percent to 8.71 reais as the MSCI Brazil/Materials Index fell the most among 10 industry groups. The Standard & Poor’s GSCI index of 24 raw materials dropped 0.9 percent.

The Ibovespa has retreated 9.6 percent this year, the worst performer after Colombia’s IGBC index among 19 major emerging markets, according to data compiled by Bloomberg. The MSCI BRIC Index of shares in Brazil, Russia, India and China has lost 0.7 percent over the same period.