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Sao Paulo stock market drops 2.2pc on credit downgrade

Sao Paulo stock market drops 2.2pc on credit downgradeSAO PAULO: Sao Paulo’s stock market opened 2.2pc lower Thursday on Standard & Poor’s decision to cut the Brazilian sovereign credit rating to junk status.

The New York-based agency cut Brazil’s long-term rating after markets here closed Wednesday, signaling a loss of confidence in the country, which has just entered recession and where the government is struggling with mushrooming debt.

Analysts say the downgrading by one of the main rating agencies puts Brazil at risk of an exit by institutional investors, like pension funds.

The S&P decision came after embattled President Dilma Rousseff’s government proposed Brazil’s first-ever deficit budget for 2016. She now has to persuade Congress, where she has little support, to back new austerity budget cuts and possibly tax raises.

Copyright AFP (Agence France-Presse), 2015

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