São Paulo's Stock Exchange (Bovespa) had today its worst session since September 11, 2001, the day terrorists attacked New York's World Trade Center. Ibovespa, the main index, plummeted 7.87% and ended up closing 6.63% down at 43.145 points.
On 9/11 the index had fallen 9.17%. On the other hand, the American dollar had its biggest hike since May of last year, rising 1.73 and closing at 2.12 reais.
The result represent a fall even worse than the one that occurred in July 2002, when the finance market reacted badly to the news that Luiz Inácio Lula da Silva, a candidate from the leftist Workers Party might be elected president of Brazil. That month Bovespa had in one day a 6.52% fall.
It was also impressive the volume of shares that changed hands: 5.44 billion reais (US$ 2.57 billion). Most of the sellers were apparently foreigners taking their money to markets they consider more secure, like the US interest markets.
Bovespa's performance was impacted by the Chinese stock market, in Shanghai, which closed close to 9% down, the biggest fall in ten years. There are several reasons for the Chinese market decline including rumors that the Chinese government will intervene in the finance market.
Some analysts, however, believe that the world commotion in the markets has to do simply with an adjustment in portfolios, when investors after having earned big profits decide to sell their shares.
Bovespa's tumble was also in response to comments made Monday, February 26, by former US Central Bank chief Alan Greenspan, who stated that the world's largest economy might get into a recession by the end of the year. News that US Vice President Dick Cheney was the target of a suicide attack in Afghanistan raised geopolitical tensions.
Data released this morning showing strong reduction in consumption by Americans in January, didn't help things either. The Dow Jones ended up falling 3.17% or more than 400 points.