Ibovespa Snaps Two-Day Gain as Central Bank Cuts Growth ForecastNey Hayashi
The Ibovespa fell for the first time in three days after Brazil’s central bank cut its 2013 economic growth forecast, pushing consumer stocks lower.
Online retailer B2W Cia. Digital was among the worst performers on the gauge. PDG Realty SA Empreendimentos e Participacoes led losses among real-estate companies. Pulp exporter Suzano Papel e Celulose SA advanced as a weaker currency boosted the outlook for sales outside Brazil.
The Ibovespa declined 0.9 percent to 51,185.74 at the close of trading in in Sao Paulo after rising 3.1 percent in the previous two sessions. The index gained 2.3 percent this week. The central bank said in its quarterly report that Brazil’s gross domestic product will grow 2.3 percent this year, down from a prior estimate of 2.5 percent.
“The main downside risk for equities is related to doubts about the domestic economy’s strength,” Fernando Goes, an analyst at Clear Corretora in Sao Paulo, said in a phone interview. “And after two days of big gains, it’s not surprising to have a correction.”
A report from the national statistics agency showed earlier this month that Brazil’s GDP contracted in the third quarter as policy makers boosted borrowing costs to curb inflation. The central bank cut today its forecast for 2014 consumer price increases to 5.6 percent from 5.7 percent.
B2W tumbled 4.7 percent, the most in three weeks, to 15.58 reais. PDG declined 3.2 percent to 1.82 reais, snapping an eight-day winning streak..
Suzano climbed 2.4 percent to 9.16 reais. The real weakened 1.2 percent to 2.3857 per U.S. dollar as of 5:39 p.m. local time. About half of Suzano’s third-quarter sales were from outside Brazil, according to data compiled by Bloomberg. The Federal Reserve’s decision this week to reduce monetary stimulus is pushing the real lower, bolstering companies that sell abroad, Goes said.
“The net impact of the Fed’s decision on the Ibovespa may be positive, as it pushes the currency lower, helping exporters and commodities producers,” Goes said.
The Fed said Dec. 18 it’s cutting monthly asset purchases that have boosted emerging-market assets to $75 billion from $85 billion, citing an improvement in the U.S. labor market.
The Ibovespa has declined 28 percent in dollar terms this year, the worst performance among the 20 biggest equity indexes tracked by Bloomberg. The MSCI Emerging Markets Index has dropped 6.2 percent.
Trading volume of stocks in Sao Paulo was 6.54 billion reais today, data compiled by Bloomberg show. That compares with a daily average of 7.48 billion reais this year, according to data available from the exchange.