Brazil’s disappointing jobs report added to speculation Latin America’s largest economy is heading to its deepest recession since 1990, sinking bank stocks.
The unemployment rate, which had tumbled to record-lows during President Dilma Rousseff’s first term, rose more than analysts forecast in April. Separately, a gauge of gross domestic product showed a bigger-than-estimated contraction.
Companies that depend on domestic demand such as busmaker Marcopolo SA dropped, while Banco Bradesco SA paced losses among lenders.
“The outlook for Brazil’s economy is very negative, so we should expect companies that sell in the domestic market to show weak results,” Hersz Ferman, an economist at brokerage Elite Corretora, said by phone from Rio de Janeiro.
With unemployment on the rise and above-target inflation eroding wages, consumer and investor confidence in Brazil has plunged. In a bid to shore up public finances and avert a credit rating downgrade to junk, Finance Minister Joaquim Levy is lobbying lawmakers to pass austerity measures such as curtailing access to jobless insurance.
Thirty-four of the Ibovespa’s 66 stocks retreated as the gauge rose 0.4 percent to 55,112.05 at the close in Sao Paulo. The index erased an earlier decline of as much as 0.7 percent as Petroleo Brasileiro SA jumped with oil.
Bull Market
Brazilian shares entered a bull market last month, after rallying more than 20 percent from their January low, on prospects for government spending cuts and after Petrobras reported long-delayed earnings.
Since then, the Ibovespa has fallen 3.3 percent on concern the economy would slow further amid the fastest inflation in more than a decade. Marcopolo declined 2.3 percent to 2.98 reais. The MSCI Brazil/Financials index dropped a fourth day.
The Finance Ministry is considering an end to the tax break given to banks and companies as a way to boost government income, Valor Economico newspaper reported without saying how it got the information.
Lender Itau Unibanco Holding SA sank 1.2 percent to 36.06 reais, the lowest in a month. Bradesco lost 1.7 percent to 29.73 reais. Petrobras climbed 4.3 percent to 13.45 reais. The oil producer will commit to selling fuel at market prices, newspaper Folha de S.Paulo reported without saying how it got the information.
The company also rose as gains in crude improved the outlook for the its offshore investments. Petrobras has said investments in oil and gas pre-salt production are economically viable with the commodity above $45.
West Texas Intermediate for July delivery advanced for a second day as U.S. oil stockpiles shrank, indicating the supply glut may be easing. Planemaker Embraer SA advanced after signing a firm order with Azul Linhas Brasilieiras SA of about $3.2 billion to sell 50 jets.
The shares rose 2.8 percent to 24.42 reais, the highest price since April 6. Trading volume of equities in Sao Paulo was 7.17 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 7 billion reais, according to the exchange.
bloomberg.com
The unemployment rate, which had tumbled to record-lows during President Dilma Rousseff’s first term, rose more than analysts forecast in April. Separately, a gauge of gross domestic product showed a bigger-than-estimated contraction.
Companies that depend on domestic demand such as busmaker Marcopolo SA dropped, while Banco Bradesco SA paced losses among lenders.
“The outlook for Brazil’s economy is very negative, so we should expect companies that sell in the domestic market to show weak results,” Hersz Ferman, an economist at brokerage Elite Corretora, said by phone from Rio de Janeiro.
With unemployment on the rise and above-target inflation eroding wages, consumer and investor confidence in Brazil has plunged. In a bid to shore up public finances and avert a credit rating downgrade to junk, Finance Minister Joaquim Levy is lobbying lawmakers to pass austerity measures such as curtailing access to jobless insurance.
Thirty-four of the Ibovespa’s 66 stocks retreated as the gauge rose 0.4 percent to 55,112.05 at the close in Sao Paulo. The index erased an earlier decline of as much as 0.7 percent as Petroleo Brasileiro SA jumped with oil.
Bull Market
Brazilian shares entered a bull market last month, after rallying more than 20 percent from their January low, on prospects for government spending cuts and after Petrobras reported long-delayed earnings.
Since then, the Ibovespa has fallen 3.3 percent on concern the economy would slow further amid the fastest inflation in more than a decade. Marcopolo declined 2.3 percent to 2.98 reais. The MSCI Brazil/Financials index dropped a fourth day.
The Finance Ministry is considering an end to the tax break given to banks and companies as a way to boost government income, Valor Economico newspaper reported without saying how it got the information.
Lender Itau Unibanco Holding SA sank 1.2 percent to 36.06 reais, the lowest in a month. Bradesco lost 1.7 percent to 29.73 reais. Petrobras climbed 4.3 percent to 13.45 reais. The oil producer will commit to selling fuel at market prices, newspaper Folha de S.Paulo reported without saying how it got the information.
The company also rose as gains in crude improved the outlook for the its offshore investments. Petrobras has said investments in oil and gas pre-salt production are economically viable with the commodity above $45.
West Texas Intermediate for July delivery advanced for a second day as U.S. oil stockpiles shrank, indicating the supply glut may be easing. Planemaker Embraer SA advanced after signing a firm order with Azul Linhas Brasilieiras SA of about $3.2 billion to sell 50 jets.
The shares rose 2.8 percent to 24.42 reais, the highest price since April 6. Trading volume of equities in Sao Paulo was 7.17 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 7 billion reais, according to the exchange.
bloomberg.com
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