Tags: Brazil | stocks | sell-off | Bovespa

Brazil Stocks Plunge in Broad Sell-Off

Tuesday, 02 Jul 2013 03:47 PM

Brazilian stocks posted their biggest one-day drop in nearly two years on Tuesday as mounting concerns over the outlook for Latin America's largest economy had investors rushing for the exits.

Mexico's IPC index ended a five-day rally with a 1 percent fall, while Chile's bourse fell for the second day in a row.

Brazil's benchmark Bovespa stock index dropped to its lowest level in over four years, losing 4.2 percent to 45,244.49 after breaking two key support levels at 46,400 and 45,400.

"We are in a period of huge volatility, the market is trending downward, and we have no buying support as people are still expecting the market to go lower as we break through supports," said Alexandre Ghirghi, a strategist with Metodo Investimentos in Sao Paulo.

Stocks fell early in the session after data showed Brazil's industrial output fell twice the amount analysts had expected in May and raised doubts over a recovery in Latin America's largest economy.

"People are losing confidence in Brazil because there is an expectation for things to change in this country and things are not changing," Ghirghi added. "We have protests in the streets and the government is not reacting the way it should, it is not reassuring investors."

Almost every stock on the Bovespa index fell, with shares of the most widely traded commodities firms contributing most to the index's losses. Shares of mining firm Vale SA sank 5.4 percent, while state-run oil producer Petroleo Brasileiro SA, known as Petrobras, plunged 6 percent, its biggest daily drop in over a year.

Shares of OGX Petroleo e Gas Participacoes SA, the oil company controlled by Brazilian billionaire Eike Batista, tumbled for a fourth straight day following an announcement Monday that the firm would be shelving three offshore oil projects.

Firms MMX Mineracao e Metalicos SA and LLX Logistica SA, also controlled by Batista, fell 15.8 percent and 9 percent, respectively.

"This kind of situation ends up creating panic, the selling begins to speed up whatever the price," said Aloisio Villeth Lemos, an analyst with Agora Corretora in Rio de Janeiro. "In the very short term, we can't say we'll have a significant improvement in the market. There are opportunities, but you have to have the stomach for it."

Mexico's IPC index halted a recent rally past 41,200 as it faced technical resistance near its 60-day simple moving average, which has limited the index's gains since late February.

Shares of telecommunications firm America Movil, controlled by billionaire Carlos Slim, fell 1.5 percent, while lender Grupo Financiero Banorte SA fell 3.2 percent.

Chile's IPSA index fell 2.22 percent to 3,865.91 as shares of retail giant Falabella SA dropped 2.8 percent.

© 2017 Thomson/Reuters. All rights reserved.

   
1Like our page
2Share
Markets
Brazilian stocks posted their biggest one-day drop in nearly two years on Tuesday as mounting concerns over the outlook for Latin America's largest economy had investors rushing for the exits.
Brazil,stocks,sell-off,Bovespa
444
2013-47-02
Tuesday, 02 Jul 2013 03:47 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved