Goldman’s Oil Call Sinks Petrobras Shares as Ibovespa Declines
Goldman Sachs Group Inc.’s forecast that oil will tumble sank Petroleo Brasileiro SA, sending the Ibovespa to the biggest drop among major stock gauges in the Americas.
Oil slid for a fifth day as the New York-based firm predicted that a continuing surplus would drag down prices to $45 a barrel by October. Petrobras, which has the second-biggest weight on the equity gauge, has said offshore investments are economically viable with crude above that level.
Chief Executive Officer Aldemir Bendine is working on a business plan to reduce the industry’s heaviest debt load and retain an investment-grade rating amid Brazil’s largest graft probe. The decline in crude to a near six-year low will be another challenge to the company’s outlook, according to Guide Investimentos’s analyst Luis Gustavo Pereira.
“Investors are concerned about oil at current levels,” Pereira said by phone from Sao Paulo. “That’s bad news for Petrobras and may put its future revenue at risk.”
The shares led losses on the Ibovespa, which retreated 1.3 percent to 55,498.82 at the close of trading in Sao Paulo. The state-owned oil company extended a two-day rout to 8.2 percent as crude decreased 3.7 percent to $57.26 a barrel in New York.
Petrobras also fell as Brazil’s Finance Ministry is said to seek reimbursement of as much as 20 billion reais ($6.6 billion) from the producer as it recalculates the price of production rights granted as part of a record $70 billion share sale. The stock dropped 6.3 percent to 12.91 reais.
In addition to oil, the slump in other commodities also helped sank the Ibovespa on Tuesday, as raw materials account for about a fourth of the gauge. Steelmakers Cia. Siderurgica Nacional SA and Usinas Siderurgicas de Minas Gerais SA retreated at least 3.7 percent.
Investors also watched the latest developments in Brazil’s attempts to trim spending and avoid a junk credit rating. The lower house considered an increase in import taxes and reduced payroll tax breaks as part of an effort to shore up finances.
Brazilian stocks entered a bull market last month, after rallying more than 20 percent from their January low, on prospects for government spending cuts. Still, the nation is struggling to navigate a slowing economy amid the fastest inflation in more than a decade.
Trading volume of equities in Sao Paulo was 7.09 billion reais ($2.33 billion), according to data compiled by Bloomberg. That compares with a daily average of 7.01 billion reais, according to the exchange.