Bloomberg News

Bovespa Index Falls to One-Week Low on Inflation, Rate Outlook

February 24, 2012

Feb. 23 (Bloomberg) -- The Bovespa dropped to a one-week low as homebuilders and consumer stocks tumbled after a report showing Brazilian consumer prices rose more than forecast this month prompted traders to pare bets for lower interest rates.

Hypermarcas SA, the maker of more than 180 consumer products, was the worst performer on the MSCI Brazil/Consumer Staples index. Homebuilder PDG Realty SA Empreendimentos & Participacoes declined the most in two weeks. Online retailer B2W Cia. Global do Varejo sank after it was rated “underweight” in new coverage at Barclays Capital.

The Bovespa fell 0.4 percent to 65,819.62 at the close of trading in Sao Paulo. Forty-nine stocks fell on the index, while 20 gained. The real weakened 0.5 percent to 1.7137 per U.S. dollar.

Consumer prices as measured by the IPC-S index rose 0.27 percent in the 30 days through yesterday, according to a report today from the Rio de Janeiro-based Getulio Vargas Foundation, exceeding the 0.22 percent median estimate of 11 economists surveyed by Bloomberg. Yields on Brazilian interest-rate futures advanced after the report was released.

“The equity market has benefited from bets for lower interest rates in the past few weeks, but now there seems to be a correction following the IPC-S report,” Luciano Rostagno, chief strategist with Banco WestLB do Brasil SA, said by phone from Sao Paulo.

The yield on the interest-rate futures contract due in January 2014, the most traded today, rose five basis points, or 0.05 percentage point, to 9.67 percent.

Qualicorp Tumbles

Hypermarcas dropped 3.3 percent to 11.99 reais. PDG Realty slid 2.5 percent to 7.73 reais. B2W fell 1.4 percent to 10.96 reais.

Health-insurance broker Qualicorp SA slumped 4.8 percent to 16 reais after saying controlling shareholder Carlyle Group and founder Jose Seripieri Filho plan to sell existing shares in the company in a public offering.

The Bovespa earlier gained as much as 0.4 percent as raw- material producers followed commodities higher after a report showed claims for unemployment insurance payments in the U.S., Brazil’s second-biggest trading partner, held at a four-year low.

Vale SA, the world’s largest iron-ore producer, rose 2 percent to 42.80 reais. OGX Petroleo & Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, added 0.9 percent to 18.21 reais. The Standard & Poor’s GSCI index of 24 raw materials climbed 0.7 percent.

The Bovespa has advanced 16 percent this year, after slumping 18 percent in 2011, buoyed by Brazil’s interest-rate cuts, signs of growth in the U.S. and renewed optimism Europe may be closer to solving its debt crisis. The gauge trades at 10.6 times analysts’ earnings estimates, compared with a 10.7 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 6.57 billion reais ($3.83 billion) in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 6.97 billion reais this year through Feb. 13, according to data from the exchange.

--Editors: Richard Richtmyer, Brendan Walsh

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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