Brazilian stocks continued south, yesterday, again mirroring a decline in the U.S. market. Brazilian shares slumped on Petrobras’ decision to boost fuel prices by a smaller-than-expected amount and inflationary concerns.
Brazil’s benchmark Bovespa Index crumbled 329.81 points, or 1.24%. Brazilian issues tumbled, following word that Brazil’s state-owned oil company Petrobras raised fuel prices much less than expected.
Petrobras announced plans to hike its refinery prices for gasoline by 2.4% and for diesel by 4.8% as of Friday. Analysts anticipated a hike based on the recent spike in world oil prices.
The last time Petrobras increased gas and diesel prices was in June. Still, another hike is predicted for later this year, as the latest increases were viewed as too small, compared with global crude prices.
Analysts, who predicted a price hike of about 10%, noted that the government could be avoiding larger rises before the second round of the municipal elections later this month.
While the price increases will likely affect Brazil’s inflation, concerns on that front were further driven by data from the University of São Paulo Fipe economic research unit.
That showed four-week inflation through October 7 of 0.27%, up from 0.21% in September, while transportation prices solidified 0.50% during the period, up from an increase of 0.44% in September.
Brazilian steel shares were active, as investors continued to trim their positions in the sector on indications that steel demand from China and elsewhere may not prove as robust as initially forecast.
Analysts remain concerned that steep world oil prices may limit worldwide economic growth.
Thomson Financial Corporate Group