Brazil Stocks Fall as Corporate Results Show Uncertain Recovery

  • While Cielo earnings disappointed, Itau results beat forecast
  • Petrobras gained after winning delay in securities-fraud trial

The Ibovespa fell the most in four weeks as disappointing earnings from Cielo SA outweighed Itau Unibanco Holding SA’s better-than-forecast results and called into question how much Latin America’s largest economy has recovered.

Credit-card processor Cielo contributed the most to the benchmark’s losses, while lender Itau rallied. Among the 24 companies on the Ibovespa that have already reported results this season, 17 posted profit that trailed analysts’ estimates.

Investors are looking to corporate results for clues as to the timing of Brazil’s economic recovery. Analysts see the country contracting 3.24 percent this year after shrinking 3.8 percent in 2015, according to a weekly survey by the central bank. Stocks have rallied 30 percent in 2016 on speculation that Acting President Michel Temer will be able to put in place an effective plan to restore growth.

"The results have been weak," Alexandre Amaral, a portfolio manager at Mirae Asset Wealth Management, said from Sao Paulo. "Brazil’s scenario remains difficult."

The Ibovespa dropped 1 percent to 56,162.38 at the close of trading in Sao Paulo as 50 of its 59 stocks declined. Cielo fell 5.7 percent, and Itau added 1.2 percent. State-controlled oil producer Petroleo Brasileiro SA climbed 1 percent after a U.S. federal appeals court awarded the company a delay in a securities-fraud case brought by investors that was set to go to trial in September.

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