Ibovespa Falls After Brazil’s 10-Day Rally as Commodities Sink

  • State-controlled Petrobras among biggest contributors to drop
  • Producers account for 21 percent of Ibovespa’s weighting

The Ibovespa ended its longest winning streak in six years, falling along with Brazil’s commodity producers as prices for raw materials from iron ore to soybeans dropped.

Voting shares of state-controlled oil giant Petroleo Brasileiro SA, known as Petrobras, were among the biggest contributors to the benchmark equity index’s drop. Miner Vale SA posted its largest two-day loss since June 27. Steelmaker Metalurgica Gerdau SA dropped 2.4 percent. Raw-material companies account for 21 percent of the Ibovespa’s weighting.

Investors are taking a pause to assess the outlook for Brazilian companies after pushing the Ibovespa 9.8 percent higher this month on speculation that Acting President Michel Temer’s government will be able to shore up the budget and restore growth. Commodities declined Wednesday as rising expectations of a U.S. interest rate increase bolstered the dollar and reduced the appeal of assets that don’t offer any yield.

"While the expectations regarding the internal prospects remain positive, we’re still waiting for better clues on where the world is heading," Paulo Figueiredo, an economist at FN Capital, said from Petropolis, Brazil.

The Ibovespa fell 0.2 percent to 56,578.05 at the close of trading in Sao Paulo as 33 of its 59 stocks declined. Petrobras’s voting stock retreated 1.3 percent and Vale dropped 0.4 percent, extending losses since July 18 to 3.2 percent. The Bloomberg Commodity Index declined 0.7 percent.

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