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:

You May Also Like

Brazil’s Gol Diversify Fare Categories Away from Its Frugal Image

Brazilian Airline Gol just announced it’s launching a new fare category structure that include ...

Brazil-Argentina Space Mission, a 9-minute Success

Brazil and Argentina have successfully launched a rocket into space in the first joint ...

Brazil’s Navy Vessels on Their Way to Haiti

Five Brazilian Navy vessels, carrying 200 Marines, departed Monday, May 1st, from Rio de ...

Press Association Wants Punishment for Killers of Brazilian Journalists

The IAPA (Inter American Press Association) seeks to end impunity for killers of two ...

Found Guilty of Corruption by Supreme, Brazil Congressman Vows to Appeal to OAS Court

Up to yesterday, the 36 defendants in Brazil’s Penal Case 470, known as the ...

The Brazil Cost Comes Mainly from Excessive Use of Highways

More than thinking about development of railways in Brazil, the government and private initiative ...

Brazil’s Plan to Divert the São Francisco River Is Good Only for Big Business

The São Francisco River is so important in Brazil that is called the river ...

Brazil Confident Job Market Will Expand

With the creation of 102,965 new jobs in March, formal employment in Brazil grew ...

Brazil in 2 Years Wishes to Double to US$ 10 Bi Foreign Tourism Income

The chairman of the Brazilian Tourism Institute (Embratur), Jeanine Pires, estimates that the entry ...

Handcraft Makes Brazil’s Spezzato Clothes Unique

Brazilian brand Spezzato is getting ready for a new project: selling clothes to the ...