(Bloomberg) -- Brazilian assets reclaimed their post as worst-in-the-world with a bang as clashes between President Jair Bolsonaro and some of his top ministers eroded what was left of investors’ optimism.Stocks sank as much as 9.6% and the currency reached an all-time low of 5.7456 per dollar as Justice Minister Sergio Moro, one of Bolsonaro’s “super ministers,” quit. His departure comes at a time when the administration is already ripe with infighting amid the
Coronavirus pandemic -- which investors fear could end up causing
economy Minister Paulo Guedes to leave, too.The central bank stemmed the currency’s slide by calling four spot dollar auctions throughout the day, selling $2.175 billion from its reserves. Officials also sold foreign-exchange swaps twice.“The bull case for
Brazil seems to be gone,” said Fabricio Taschetto, chief investment officer at Ace Capital.Moro’s exit adds to rising tension. Health Minister Luiz Henrique Mandetta was fired last week after clashing with Bolsonaro on the pandemic. Now all eyes turn to Guedes, who is at odds with plans to boost the economy through a 10-year, massive investment program.A Guedes departure “would be the end of the ‘good story’ for Brazil,” said Delphine Arrighi, a fund manager at Merian Global Investors
UK Ltd. in
London.The coronavirus outbreak has all but shelved Brazil’s reform agenda, and conflicts between the government and lawmakers has made analysts less confident the government will be able to resume those talks once the crisis is over. The outlook for corporate profits, which had boosted stocks, is also out the window, with Santander now expecting a 15% contraction in earnings per share this year.The massive shift in the outlook has sent the Ibovespa stock index down 55% in dollar terms since the beginning of year, by far the worst performer among global stock indexes. The real has lost a third of its value, lagging all other currencies.“The local scenario is as messy as it could get,” said Gustavo Pessoa, a founding partner at Legacy Capital.(Adds central bank intervention in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.