The Ibovespa (IBOV) dropped as Itau Unibanco Holding SA led banks lower on speculation recent gains among financial institutions were hard to sustain considering Brazil’s economic and political outlook.
Meatpacker JBS SA was the worst performer on the benchmark equity gauge as Tyson Foods Inc. (TSN:US) made an unsolicited $6.2 billion offer to buy Hillshire Brands Co. after a bid from JBS’s Pilgrim’s Pride Corp. (PPC:US) Homebuilder Rossi Residencial SA led gains among companies that depend on domestic demand after Brazil’s central bank halted increases in borrowing costs.
The Ibovespa fell 0.4 percent to 52,424.61 at 1:29 p.m. in Sao Paulo. The real climbed 0.6 percent to 2.2175 per U.S. dollar. Brazil entered a bull market May 7, with the benchmark index surging 20 percent from this year’s low on March 14 as Petroleo Brasileiro SA rallied on speculation a change in government will reduce intervention in state-run companies.
“Nothing has really changed regarding politics or the economy, so investors are getting more cautious, waiting to see what happens,” Fernando Goes, an analyst at brokerage firm Clear Corretora, said by phone from Sao Paulo. “There is a lot of uncertainty for the banks as well.”
Itau declined 1.4 percent to 35.85 reais. JBS slumped 3.3 percent to 7.61 reais.
The supreme court delayed yesterday its ruling on a case in which depositors sued lenders for as much as 341.5 billion reais over savings account losses related to government policies to curb hyperinflation more than 20 years ago.
Trading volume of stocks was 2 billion reais, data compiled by Bloomberg show. That compares with a daily average of 6.64 billion reais this year, according to exchange data.
Rossi climbed 1.9 percent to 1.65 real as concern eased that higher borrowing costs will sink home sales.
The board of Brazil’s central bank decided yesterday to keep the target lending rate at 11 percent, ending the world’s longest tightening cycle in the past year. The move was forecast by 46 of 53 economists surveyed by Bloomberg.
“That decision was already expected and should give a relief for consumer stocks,” Eduardo Velho, the chief economist at INVX Global Partners, said by phone from Sao Paulo.
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