Black Wednesday Knocks Brazil Markets Down 5%

Brazil's stock exchange Bovespa It was Brazil stock market's second worst day this year. Battered by a widespread slump in the global prices of commodities, Bovespa, the São Paulo stock exchange, this Wednesday,  March 19, plummeted 5.01%, closing at 58,827 points with 6.8 billion reais (US$ 3.97) traded.

Oil, for example, fell almost 6% in New York, closing at US$ 104.48 a barrel, a 4.72% decline. And among the most beat up companies in Brazil were giants Petrobras, the state-controlled oil multinational and the mining firm Vale.

Petrobrás's and Vale's preferential shares had steeper reductions than the Bovespa itself. While Petrobras declined 7.4%, Vale shrank 7.2% during the Wednesday session.

Ibovespa, the Bovespa's main index, mirrored the European and American markets in a day in which uncertainty continued to dominate the financial world.

While the stocks tumbled the American dollar went up 1.77% to 1.721 reais, erasing the gain from the previous day. On Tuesday, announcement by the Fed of a 0.75% cut in interest rates had caused the dollar to fall 1.9% in relation to the Brazilian currency.

Analysts explained that the market was particularly shaken in Brazil, much more than in the United States or Europe, due to the fact that commodities have a great weight in the Brazilian economic performance. Brazilian companies that export raw material are heavily represented in the São Paulo stock market.

"Our fall was basically caused by commodities," explained Jayme Soares Alves Neto, an investment analyst with brokerage house Spinelli. "Petrobrás, Vale and the steel plants, which are exporters of these products, are the main companies negotiated in the stock market."

Alves Neto believes that the US subprime crisis will continue to make victims worldwide. "The Fed," he says,  "should help in a way that there is no systemic crisis in the financial system. It cannot help every one though. That would give a sense of impunity to those who bet too high."

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Brazil Gets a Permanent US$ 6.5 Sovereign Wealth Fund

The Brazilian House of Representatives approved on Tuesday night legislation making an existing Sovereign ...

Town of Santa Tereza, Espírito Santo, Brazil

A Trip Back in Time to Meet Grandpa and His 21 Kids in Brazil

It was January of 2006 when my American husband and I traveled to Santa ...

Women Shoes with Personality Is This Brazil’s Company Specialty

Siboney, a female shoe industry from the city of Igrejinha, in the southernmost Brazilian ...

Brazil Now Has Guerrilla School and Quotas for Cuba

It all must have started with the first college of Theology. In establishing a ...

Brazil’s Economy Shrinks, So Does Consumer Confidence

Brazil’s Gross Domestic Product (GDP) went down in the third quarter of this year ...

After the Fall of 4 Ministers in 2 Months Brazilians Wonder Whose Head Will Roll Next

Brazil’s minister of Agriculture, Wagner Rossi, sent a letter of resignation to president Dilma ...

Brazil Central Bank’s Survey Shows the Industry’s Upbeat Mood

Prospects for industrial growth have been looking up for three weeks, according to expert ...

70% of New Companies Fail in Brazil

Between 2000 and 2006 726,600 companies were established each year, in average, in Brazil. ...

Naughty, Naughty Santa

There is no other country like Brazil in which the lines between men’s magazines ...

US Loses WTO Cotton War Against Brazil

The World Trade Organization (WTO) confirmed a previous ruling in favor of Brazil on ...