Bloomberg News

Bovespa Drops as Commodities Fall, Gerdau Sinks on Earnings Miss

May 03, 2012

The Bovespa index fell for the first time in three days as signs the global recovery may be faltering pushed down commodities, dimming the outlook for Brazilian producers, and steelmaker Gerdau SA sank after its earnings trailed estimates.

Petroleo Brasileiro SA contributed the most to the gauge’s decline as crude tumbled. Tim Participacoes SA dropped after Veja reported that the wireless phone company’s chief executive officer is leaving.

The Bovespa slipped 0.5 percent to 62,104.15 at the close in Sao Paulo. Thirty-seven stocks retreated while 27 advanced. The real rose 0.7 percent to 1.9094 per U.S. dollar.

A measure of growth in U.S. services industries dropped to a four-month low, a sign the biggest part of the world’s largest economy is struggling to accelerate. European Central Bank President Mario Draghi said the economic outlook has become “more uncertain” and policy makers didn’t discuss cutting interest rates at their meeting this week.

“Because the biggest companies in the Bovespa are commodities exporters, any data signaling the American economy, and therefore demand, is not recovering affects Brazilian markets,” Eduardo Matsura, an analyst at Souza Barros Corretora, said by phone from Sao Paulo.

In Brazil, industrial production declined 2.1 percent in March from a year earlier, compared with a median estimate for a 1.2 percent rise among 37 analysts in a Bloomberg News survey.

The S&P GSCI Index of 24 raw materials slid 1.4 percent.

Gerdau, Petrobras

Gerdau, Latin America’s largest steelmaker, dropped 2.5 percent to 17.37 reais. Net income fell 5.4 percent to 369.6 million reais ($192 million) from 390.8 million reais in the year-earlier period. Heavy rain in Brazil hindered shipments, and costs increased more than sales, the company said yesterday in a statement. It was expected to post a profit of 435.6 million reais, excluding some items, according to the average of nine analysts’ estimates compiled by Bloomberg.

Petrobras lost 2.7 percent to 21.40 reais. Crude tumbled the most this year, dropping 2.5 percent on the New York Mercantile Exchange.

Tim declined 5.8 percent to 10.65 reais in the biggest drop in nine months. The company may announce today that Chief Executive Officer Luca Luciani will leave, Veja reported on its Radar On-line column, without saying where it obtained the information. The company’s press office in Sao Paulo didn’t immediately respond to Bloomberg News request for comment by telephone.

Brazil’s benchmark equity measure has gained 9.4 percent in 2012, buoyed by local interest-rate cuts, signs of expansion in the U.S. and speculation Europe may be closer to resolving its sovereign-debt crisis. The Bovespa trades at 10.5 times analysts’ earnings estimates, in line with the 10.6 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 6.97 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 7.23 billion reais this year through April 27, according to data from the exchange.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

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


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