Brazilian Stocks Drop as Fed Minutes Show Stimulus Cut SupportNey Hayashi
Most Brazilian stocks fell, with the Ibovesa reversing an earlier gain, after minutes showing Federal Reserve policy makers supported cutting U.S. stimulus stoked concern that demand will wane for emerging-market assets.
Meatpacker JBS SA led declines on the benchmark gauge, as all 10 industry groups tracked by MSCI Inc. indexes retreated. Iron-ore producer Vale SA contributed most to the Ibovespa’s drop as commodities fell. Rossi Residencial SA led homebuilders lower as traders raised bets for higher borrowing costs in Brazil. Losses were limited as planemaker Embraer SA led gains among some exporters as the real plunged to a 2008 low.
The Ibovespa fell 0.2 percent to 50,405.20 at the close of trading in Sao Paulo with 39 of 71 stocks lower. The gauge earlier swung between a 1.3 percent gain and a 0.9 percent loss. Minutes of the Fed’s last meeting showed policy makers were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to start reducing bond buying later this year if the economy improves, with a few saying tapering might be needed soon.
“We’re going through a very delicate moment, with the Fed getting close to starting to cut back stimulus,” Fausto Gouveia, who helps manage 380 million reais at Sao Paulo-based Legan Administracao de Recursos, said in a phone interview. “The outlook is not very favorable for equities.”
Vale fell 1 percent to 31.11 reais. JBS dropped 4.9 percent to 7.37 reais. Rossi sank 4.5 percent to 2.76 reais.
The Standard & Poor’s GSCI index of 24 raw materials fell 0.5 percent. The Bloomberg Base Metals 3-Month Price Commodity Index lost 1 percent, the most in three weeks.
The real weakened 2.4 percent to 2.4528 per dollar at 5:32 p.m. local time, a four-year low. Brazilian swap rates climbed on most contracts after the national statistics agency said consumer prices measured by the IPCA-15 index rose at an annual pace of 6.15 percent, faster than the 6.14 percent median forecast of economists surveyed by Bloomberg.
Embraer, which gets about 85 percent of its sales outside Brazil, gained 2.6 percent to 20.25 reais. Fibria Celulose SA, the world’s largest pulp producer, gained 1.5 percent to 29.22 reais, the highest since November 2010.
Coal producer CCX Carvao da Colombia SA led a rally by companies founded by the former Brazilian billionaire Eike Batista. The shares jumped 25 percent to 1.60 reais, pushing a three-day surge to 65 percent.
OGX Petroleo e Gas Participacoes SA, Batista’s oil unit, climbed 2.9 percent to 70 centavos. The company’s bondholders hired Rothschild to advise on a debt restructuring, said a person with direct knowledge of the matter who asked not to be identified. Rothschild declined to comment.
The Ibovespa has gained 12 percent from this year’s low on July 3 as higher commodities prices and a weaker real boosted raw-material exporters. The MSCI Emerging Markets Index of 21 developing nations’ equities advanced 1.3 percent during the same period.
Trading volume of stocks in Sao Paulo today was 8.02 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 7.77 billion reais this year through Aug. 19, according to data compiled by the exchange.