LOS ANGELES (MarketWatch) — Brazilian stocks tumbled Wednesday, part of a global selloff in equities on heightened fears that an exit from the euro zone by Greece will result in costly damage for the key export region.
Major benchmarks in Latin America during the session logged losses between 1% and more than 3%, with investors watching for any signs that debt-strapped Greece will leave the euro as European Union leaders meet at an informal summit Brussels.
“European leaders will very likely continue to engage in a delicate balancing act regarding Greece in order to prevent Greece from exiting the euro,” analysts at Global Hunter Securities said Wednesday in a report outlining its view of gold prices this year.
Europe must prevent an exit by Greece,“otherwise distressed debts convert into exercisable defaults that would trigger derivatives, including a nice bill to U.S. derivatives issuers,” the analysts said.
Brazil’s Ibovespa index BR:BVSP -0.76% recently fell 3.3% to 53,273, adding to its 2.7% fall in the previous session, and extending its yearly loss to 6%.
Retail, communications and housing stocks logged the worst performances on Wednesday, with discounter Lojas Americanas. BR:LAME4 -3.88% down 6.4%.
Officials in Brazil have unveiled tax cuts and other incentives to bolster consumption in Latin America’s second-largest economy and soften the impact from slower activity in Europe. China is also a focal point for Brazil, as it is Brazil’s largest trading partner and a key consumer of Brazilian commodities.
The World Bank on Wednesday offered a downbeat assessment of economic activity in China and lowered its yearly growth outlook on the world’s second-largest economy.
Mexico’s IPC MX:IPC -0.08% fell 1.3% to 36,982, with exchange operator Bolsa Mexicana de Valores up 0.1%. It was only one of three stocks on the 35-issues index that moved higher.
Chilean stocks as tracked by the IPSA CL:IPSA -0.84% fell 1.6% to 4,169, led by declines among commodities, banking and retail issues.
Argentina’s Merval AR:MERV +2.20% fell 1% to 2,216, facing its first loss in four sessions. Stocks slid on Wall Street, where the S&P 500 Index SPX +0.17% fell 1.1% to 1,302 and the Dow Jones Industrial Average DJIA -0.05% fell 146 points to 12,357. European stocks fell sharply, leaving the Stoxx Europe 600 index XX:SXXP -2.14% down 2.1%.
Elsewhere in Sao Paulo trading, shares of Banco do Brasil BR:BBAS3 -4.20% lost 6.2% following reports the state-run bank is seeking a minority stake in Banco Santander Brasil BSBR +3.17% BR:SANB11 +0.67% , a unit of Spain’s Banco Santander STD -1.21% .
Among currencies, Brazil’s currency USDBRL -0.1402% remained stuck at three-year lows against the U.S. dollar, weighed by Greek worries.
The dollar was buying 2.049 reals compared with 2.0589 reals on Tuesday. The central bank on Wednesday held a swap auction as the currency reached the 2.1 level against the greenback. That followed two separate swap auctions held by the central bank Tuesday to curb the real’s depreciation.
The bank sold the equivalent of about $2.2 billion in the forward market. With the double swap intervention and the Finance Ministry’s cut on a tax on financial transactions for exporters to zero, it appears “authorities are not targeting volatility.
Instead, it is probably a sign that we have reached a level where they are getting uncomfortable,” said Win Thin, global head of emerging market currency strategy at Brown Brother Harriman, to clients.
The trajectory of the recent selloff in the Brazilian real is “almost vertical” as it was in late 2008, noted TD Securities analyst Richard Gilhooly, adding that the currency during the 2008 global crisis hit a low of roughly 2.4 reals as investors sought safety in the greenback.
Capital flight “is not restricted to Greece and Peripheral Europe but is increasingly being seen in the BRICs,” he wrote.
marketwatch.com
Major benchmarks in Latin America during the session logged losses between 1% and more than 3%, with investors watching for any signs that debt-strapped Greece will leave the euro as European Union leaders meet at an informal summit Brussels.
“European leaders will very likely continue to engage in a delicate balancing act regarding Greece in order to prevent Greece from exiting the euro,” analysts at Global Hunter Securities said Wednesday in a report outlining its view of gold prices this year.
Europe must prevent an exit by Greece,“otherwise distressed debts convert into exercisable defaults that would trigger derivatives, including a nice bill to U.S. derivatives issuers,” the analysts said.
Brazil’s Ibovespa index BR:BVSP -0.76% recently fell 3.3% to 53,273, adding to its 2.7% fall in the previous session, and extending its yearly loss to 6%.
Retail, communications and housing stocks logged the worst performances on Wednesday, with discounter Lojas Americanas. BR:LAME4 -3.88% down 6.4%.
Officials in Brazil have unveiled tax cuts and other incentives to bolster consumption in Latin America’s second-largest economy and soften the impact from slower activity in Europe. China is also a focal point for Brazil, as it is Brazil’s largest trading partner and a key consumer of Brazilian commodities.
The World Bank on Wednesday offered a downbeat assessment of economic activity in China and lowered its yearly growth outlook on the world’s second-largest economy.
Mexico’s IPC MX:IPC -0.08% fell 1.3% to 36,982, with exchange operator Bolsa Mexicana de Valores up 0.1%. It was only one of three stocks on the 35-issues index that moved higher.
Chilean stocks as tracked by the IPSA CL:IPSA -0.84% fell 1.6% to 4,169, led by declines among commodities, banking and retail issues.
Argentina’s Merval AR:MERV +2.20% fell 1% to 2,216, facing its first loss in four sessions. Stocks slid on Wall Street, where the S&P 500 Index SPX +0.17% fell 1.1% to 1,302 and the Dow Jones Industrial Average DJIA -0.05% fell 146 points to 12,357. European stocks fell sharply, leaving the Stoxx Europe 600 index XX:SXXP -2.14% down 2.1%.
Elsewhere in Sao Paulo trading, shares of Banco do Brasil BR:BBAS3 -4.20% lost 6.2% following reports the state-run bank is seeking a minority stake in Banco Santander Brasil BSBR +3.17% BR:SANB11 +0.67% , a unit of Spain’s Banco Santander STD -1.21% .
Among currencies, Brazil’s currency USDBRL -0.1402% remained stuck at three-year lows against the U.S. dollar, weighed by Greek worries.
The dollar was buying 2.049 reals compared with 2.0589 reals on Tuesday. The central bank on Wednesday held a swap auction as the currency reached the 2.1 level against the greenback. That followed two separate swap auctions held by the central bank Tuesday to curb the real’s depreciation.
The bank sold the equivalent of about $2.2 billion in the forward market. With the double swap intervention and the Finance Ministry’s cut on a tax on financial transactions for exporters to zero, it appears “authorities are not targeting volatility.
Instead, it is probably a sign that we have reached a level where they are getting uncomfortable,” said Win Thin, global head of emerging market currency strategy at Brown Brother Harriman, to clients.
The trajectory of the recent selloff in the Brazilian real is “almost vertical” as it was in late 2008, noted TD Securities analyst Richard Gilhooly, adding that the currency during the 2008 global crisis hit a low of roughly 2.4 reals as investors sought safety in the greenback.
Capital flight “is not restricted to Greece and Peripheral Europe but is increasingly being seen in the BRICs,” he wrote.
marketwatch.com
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