Ibovespa Snaps Four-Day Rally as Commodity Drop Sinks Petrobras

The Ibovespa dropped, after entering a bull market yesterday, as a slump in commodity prices sapped raw-material producers and faster-than-forecast inflation in Brazil pushed homebuilders lower.

State-controlled oil company Petroleo Brasileiro SA contributed the most to the gauge’s slide after rising yesterday to its highest since November. The gauge for energy stocks on the MSCI Brazil Index was the worst performer among 10 industry groups. Homebuilder PDG Realty SA Empreendimentos e Participacoes led declines by companies that rely on domestic demand.

The benchmark index retreated 1.2 percent to 53,422.37 at the close of trading in Sao Paulo, with 48 stocks falling and 21 rising. The real gained 0.1 percent to 2.2150 per U.S. dollar. The S&P GSCI Index of 24 raw materials dropped 0.3 percent. Commodity producers account for about one-third of Ibovespa’s weighting, according to data compiled by Bloomberg.

“Commodity companies suffer when prices drop,” Ricardo Pinto Nogueira, the head of operations at brokerage firm Souza Barros, said in a phone interview from Sao Paulo. “And the market also thinks the recent rally has pushed some stocks up too much. Investors are selling to profit from the huge gains this month.”

The Ibovespa entered a bull market yesterday, surging 20 percent from this year’s low on March 14 amid speculation Brazil’s President Dilma Rousseff will be voted out of office after overseeing faltering economic growth.

Petrobras, Vale

Petrobras, as Petroleo Brasileiro is known, declined 3.8 percent to 17.88 reais, trimming a rally from this year’s low on March 17 to 42 percent. Vale SA, the world’s largest iron-ore producer, slipped 1.5 percent to 26.83 reais.

PDG declined 2.5 percent to 1.56 reais.

Swap rates, a gauge of expectations for interest-rate moves, rose on most contracts as the Getulio Vargas Foundation said inflation in Brazil’s seven biggest cities accelerated to 0.84 percent in the month ending May 7. The median forecast of economists surveyed by Bloomberg was 0.76 percent.

Banco do Brasil SA retreated 4.3 percent to 23.94 reais after Chief Financial Officer Ivan Monteiro said the lender will review its 2015 dividend policy. Phone company Telefonica Brasil SA dropped 1 percent to 46.59 reais after posting first-quarter earnings that missed analysts’ forecasts.

Trading volume of stocks in Sao Paulo was 6.8 billion reais today, data compiled by Bloomberg show. That compares with a daily average of 6.8 billion reais this year, according to data from the exchange.

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