Brazilian stocks follow global trends and operate in the red

stocks vale iron ore
China is determined to cut down its steel production. Photo: Junrong/Shutterstock

Stocks in São Paulo slumped on Monday amid a global slip in benchmark indexes amid a string of concerns for investors. The Ibovespa index is down 3 percent, below the 108,000-point mark. Since the beginning of the year, the index has fallen by over 9 percent.

International markets are wavering due to concerns about a potential default from Chinese developer China Evergrande Group, rising energy prices in Europe, and questions about how the U.S. Federal Reserve will manage its exit from ultra-easy policies. Hong Kong’s Hang Seng index led losses in Monday trading, down 3.3 percent. In the U.S., the S&P 500 is almost 2 percent below opening-bell levels. 

In Brazil, shares of mining giant Vale (which weighs heavily on Ibovespa) are down nearly 5 percent as a result of the continuing rout of iron ore prices, which have fallen below the USD 100 mark for the first time in a year. The commodity is taking a nosedive due to China’s move to scale down steel production, responsible for 10 to 20 percent of the country’s carbon emissions.

As we explained in today’s edition of the Brazil Weekly newsletter, Vale’s fundamentals continue as solid as ever — but the iron ore slump is scaring speculative investors. The company opened today’s trading session down 5.81 percent in its year-to-date performance.