Brazilian markets weakened on profit taking following recent gains. Yesterday, Brazilian equities set new record closing highs. Profit taking overtook enthusiasm regarding a further decline in global oil prices.
Crude oil prices continued sharply lower to well below US$ 44 a barrel, following yesterday’s unexpectedly robust U.S. inventory data, as well as indications OPEC will likely keep production at current levels when it meets next week.
Brazil’s benchmark Bovespa Index shed 34.30 points, or 0.14%. Brazilian stocks ebbed, as investors logged profits following a new all- time high in the previous session, despite the impact of continued declines in world oil prices.
The fall in oil prices pressured shares of Petrobras, which generally follows the trends in international oil markets for its domestic fuel prices.
That stock had risen notably in recent session. Analysts commented that recent positive macroeconomic news in Brazil brightens the medium-term outlook for equities.
Following recent weakness in the U.S. dollar, investors focused on comments from European Central Bank President Jean-Claude Trichet for signs of a potential currency intervention scheme.
However, the ECB president declined to comment on the implications of the rising euro, other than to note that, “recent moves were unwelcome.”
Brazilian airline Gol continued to soar after Petrobras said it cut its price for jet fuel by 2.2% on Wednesday.
Still, Varig, Viação Aérea Riograndense, was not so lucky, after the new head of Brazil’s National Development Bank said the government will not provide direct loans to rescue the debt-laden airline from 6.6 billion reais of debt, but may finance a group that would take over the carrier.
Thomson Financial Corporate Group