Most Brazilian Stocks Decline as Stronger Currency Sinks Gerdau

Most Brazilian stocks dropped as a stronger real dimmed the outlook for exports, pushing commodities producers including steelmaker Gerdau SA lower.

Usinas Siderurgicas de Minas Gerais, the steelmaker known as Usiminas, and Cia. Siderurgica Nacional SA each fell at least 1.2 percent. Clothing maker and retailer Cia. Hering led gains by companies that sell in the domestic market after a central bank survey showed economists raised growth forecasts.

The Ibovespa was little changed at 53,821.63 at the close of trading in Sao Paulo, with 38 stocks lower and 35 higher. The real fell less than 0.1 percent to 2.2823 per dollar at 5:24 p.m. local time after earlier climbing 1.4 percent to 2.2486.

“Some companies, such as steelmakers, have gained a lot on the back of the weakening of the currency, and now we’re seeing some profit taking,” Joao Pedro Brugger, a portfolio manager at Leme Investimentos, said by phone from Florianopolis, Brazil.

The real rose earlier on speculation the next U.S. Federal Reserve chairman will maintain stimulus for a longer period, supporting efforts by Brazil’s policy makers to bolster the currency. The South American country’s central bank sold $497 million of foreign-exchange swaps and rolled over $1.96 billion worth of contracts under its $60 billion intervention program.

Brazil GDP

Usiminas lost 1.5 percent to 10.44 reais, paring a two-month rally to 43 percent. Gerdau dropped 0.9 percent to 16.85 reais, while CSN, as Cia. Siderurgica is known, declined 1.2 percent to 9.29 reais.

The Ibovespa earlier climbed as much as 1.2 percent as economists increased their projections for Brazil’s growth this year. Gross domestic product will expand 2.4 percent, up from the previous week’s median estimate of 2.35 percent, according to a central bank survey of about 100 analysts released today. Expansion estimates have increased for three consecutive weeks.

“Investors seem a little more optimistic about the country’s growth this year and the outlook for local companies’ results,” Felipe Rocha, an analyst at the brokerage firm Omar Camargo, said by phone from Curitiba, Brazil.

Hering added 3.8 percent to 34.70 reais.

Global stocks rose as investors speculated on a slower tapering to Federal Reserve stimulus after the announcement yesterday that Lawrence Summers would withdraw from consideration to become the next chairman of the U.S. central bank, according to Eduardo Velho, the chief economist at INVX Global Partners in Sao Paulo. Summers was seen as more likely than other candidates to push for an end to the Fed’s $85 billion in monthly bond purchases, he said.

Fed Outlook

“Uncertainties about how and when the Fed will trim the stimulus have caused volatility on the markets lately,” Velho said.

Summers’ withdrawal as a candidate paves the way for Janet Yellen, the central bank’s vice chairman, to take the job. She would favor a slower reduction of stimulus, according to a Bloomberg Global Poll last week.

The Ibovespa entered a bull market on Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 21 percent in dollar terms this year, compared with a decline of 5.1 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo was 6.02 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.74 billion reais this year through Sept. 13, according to data compiled by the exchange.

Before it's here, it's on the Bloomberg Terminal.