Brazil’s Stocks Fall With Commodities Before Fed Minutes Release

  • Minutes may explain why Fed was vague on timing of next move
  • Raw-materials producers including Vale, Petrobras declined

The Ibovespa fell as concern mounted that an earlier-than-expected increase in U.S. interest rates would slow inflows of capital to Brazil as it struggles to recover from recession.

Miner Vale SA and state-controlled oil company Petroleo Brasileiro SA were among the biggest contributors to the benchmark equity index’s decline, following a drop in commodity prices.

Investors worldwide awaited the minutes of the U.S. central bank’s most recent meeting, which may show why policy makers failed to indicate the timing of their next move. Federal Reserve Bank of New York President William Dudley on Tuesday said that interest rates could be raised as soon as next month. Brazilian assets have benefited in the past months from investors search for higher returns in emerging markets, and rising yields in the world’s largest economy might diminish the allure of riskier investments.

"The markets were expecting that Brazil would get stronger before a rate increase in the U.S.," Jason Vieira, chief economist at Infinity Asset Management, said from Sao Paulo.

The Ibovespa dropped 0.4 percent to 58,635.15 at 10:32 a.m. in Sao Paulo. Thirty-five of the gauge’s 59 stocks declined. Vale fell 1.4 percent and Petrobras, as Petroleo Brasileiro is known, declined 0.6 percent.

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