The Bovespa (IBOV) index fell for a third day after Brazilian companies reported lower profits and consumer prices rose more than analysts expected.
Braskem SA, Latin America’s largest petrochemicals maker, fell to the lowest since June 2010 after it said first-quarter profit fell 50 percent as costs soared and a weaker real boosted the value of its dollar-denominated debt. Telefonica Brasil SA, Brazil’s largest phone company by revenue, declined to a two- week low after its net income trailed analysts’ estimates.
The Bovespa retreated 0.1 percent to 59,702.05 at the close in Sao Paulo, after erasing an earlier gain of as much as 1.6 percent. Thirty-two stocks fell while 34 advanced. The real strengthened 0.8 percent to 1.9548 per U.S. dollar.
Among the 36 companies on the Bovespa index that have already reported first-quarter earnings, 19 missed analysts’ estimates, according to data compiled by Bloomberg.
“There is so much bad news affecting the Bovespa, like the disappointing results from the companies,” Jose Luiz Garcia, a portfolio manager at Mercatto Gestao de Recursos, said by phone from Rio de Janeiro. “Investors are expecting Petrobras’s earnings, due tomorrow, to be weak too.”
Petroleo Brasileiro SA (PBR:US), the state-run oil producer known as Petrobras, fell 1.2 percent to 19.92 reais, the second-biggest decline on the Bovespa.
The IGP-M index of wholesale, consumer and construction prices rose 0.89 percent in the period that the Getulio Vargas Foundation calls its first preview for May. The median forecast of analysts in a Bloomberg News survey was for an increase of 0.70 percent.
Policy makers cut the benchmark lending rate by 75 basis points, 0.75 percentage point, to 9 percent on April 18 to revive growth that slowed to 2.7 percent last year from 7.5 percent in 2010. The central bank has lowered its target rate 350 basis points since August.
“Investors are expecting the central bank to keep cutting interest rates, which should help real estate and retail companies,” Pedro Galdi, an analyst at SLW Corretora, said by phone from Sao Paulo. “But with rising inflation it might not be the case anymore.”
Braskem slipped 4.6 percent to 12.55 reais. First-quarter net income dropped to 152 million reais ($77.3 million) from 305 million reais a year earlier, the company said in a regulatory filing today.
Telefonica Brasil fell 1.1 percent to 54.10 reais. Net income fell 15 percent to 956.6 million reais in the first quarter, from 1.13 billion reais a year earlier, the Sao Paulo- based phone company said in a regulatory filing. The average estimate was for an adjusted profit of 1.03 billion reais, according to six analysts surveyed by Bloomberg.
The Bovespa has gained 5.2 percent in 2012, buoyed by local interest-rate cuts and signs of expansion in the U.S. The measure has fallen 13 percent since this year’s high on March 13 on concern Europe debt crisis is worsening and speculation a slowdown in China, Brazil’s biggest trading partner, may be deeper than expected.
Trading volume was 6.07 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg say. That compares with a daily average of 7.22 billion reais this year through May 8, according to data from the exchange.
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