Ibovespa Posts Weekly Drop as Vale Leads Materials Stocks Lower

The Ibovespa posted its first weekly decline in September as Vale SA led commodity exporters lower on concern a U.S. political impasse over the budget will slow growth for Brazil’s second-biggest trade partner.

Retailers including Lojas Americanas SA fell after a report showed Brazil’s inflation accelerated more than forecast. OGX Petroleo e Gas Participacoes SA, the oil company founded by Eike Batista, was the worst performer on the Ibovespa. Banco Santander Brasil SA rallied the most on record after saying it will pay out 6 billion reais ($2.7 billion) to shareholders and issue the same amount of debt in a capital restructuring.

The Ibovespa lost 0.1 percent to 53,738.92 at the close of trading in Sao Paulo, extending the weekly decline to 0.7 percent. Forty-one stocks climbed and 32 fell today. The real weakened 0.3 percent to 2.2517 per dollar.

“Until there’s a solution to the budget issue in the U.S., investors will remain cautious, keeping Brazilian stocks from rising,” Fausto Gouveia, who helps manage 500 million reais at Legan Administracao de Recursos, said in a telephone interview from Sao Paulo.

The Standard & Poor’s 500 Index fell 0.4 percent on concern the U.S. Congress will fail to approve a federal budget before the Sept. 30 deadline. A shutdown of the federal government would reduce fourth-quarter economic growth by as much as 1.4 percentage points depending on its length, according to economists.

OGX dropped 9.7 percent to 28 centavos, a record low. Vale fell 1.6 percent to 32.14 reais.

Brazil Inflation

Lojas Americanas declined 2.3 percent to 16.51 reais. Brazil’s IGP-M index of wholesale, construction and consumer prices climbed 4.40 percent in the 12 months through September, the Getulio Vargas Foundation reported. The median forecast of 19 economists surveyed by Bloomberg was for an increase of 4.35 percent compared with the prior 3.85 percent.

Santander jumped 7.6 percent to 15.50 reais. The plan announced yesterday will address the bank’s “inefficient capital structure” and was a “positive surprise,” Deutsche Bank AG analysts Mario Pierry and Tito Labarta wrote in a research note to clients.

The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 20 percent in dollar terms this year, compared with a decline of 5.3 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo today was 6.2 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 7.71 billion reais this year through Sept. 24, according to data compiled by the exchange.

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