Vale S.A. (NYSE:VALE) stock fell nearly 4% in Monday's premarket trading after Brazilian President Luiz Inácio Lula da Silva secured another term, defeating Sen. Flávio Bolsonaro.
The election outcome deepened the political rift between Latin America's largest economy and U.S. President Donald Trump.
Several U.S.-listed Brazilian stocks also traded lower in Monday's premarket session following Lula's election victory.
Meanwhile, U.S. stock futures were mixed. Nasdaq futures slipped 0.11%, while S&P 500 futures rose 0.04%.
Why Is Vale Stock Falling?
Lula defeated right-wing Sen. Flávio Bolsonaro in Brazil's presidential runoff Sunday, surprising investors who had expected a Bolsonaro victory.
Brazilian stocks had rallied in recent weeks after Bolsonaro gained an unexpected lead in the first round of voting.
Investors expected Bolsonaro to introduce business-friendly reforms, reduce government spending and support privatization.
However, Lula's victory changed those expectations. As a result, investors appeared to unwind positions tied to a Bolsonaro win.
For Vale, the political uncertainty adds pressure to an already weak technical outlook.
Vale Stock Faces Bearish Technical Signals
Vale shares remain below their major simple moving averages (SMAs), signaling continued weakness.
The stock trades 9.4% below its 20-day SMA of $13.30 and 14.5% below its 50-day SMA of $14.10.
Additionally, shares sit 16.9% below the 100-day SMA of $14.50 and 21.4% below the 200-day SMA of $15.32.
The moving average pattern also remains bearish. The 20-day SMA is below the 50-day SMA, while an August death cross continues to signal longer-term weakness.
Meanwhile, the moving average convergence divergence (MACD) indicator remains below its signal line. Its negative histogram suggests fading buying momentum.
Key levels to watch: The $11.38 52-week low remains an important support level. A break below that price could trigger further selling.
On the upside, $12.50 serves as immediate resistance. Vale must clear that level before attempting a stronger recovery.
Vale Earnings: What Analysts Expect
Vale will report third-quarter earnings Oct. 29, after the market closes.
Analysts expect earnings of 36 cents per share, down from 63 cents a year earlier. Revenue is projected at $10.2 billion, compared with $10.42 billion in the year-ago period.
Meanwhile, Vale trades at a price-to-earnings ratio of 24.8.
The stock carries a Hold consensus rating, with an average price forecast of $15.95. Recent analyst actions include:
- UBS: Maintained Neutral and lowered its price forecast to $14.50 on Oct. 21.
- Scotiabank: Upgraded Vale to Sector Outperform and maintained a $16 price forecast on Oct. 19.
- Barclays: Maintained Equal-Weight and reduced its price forecast to $15 on Oct. 13.
VALE Stock Price Activity: Vale shares were down 3.63% at $11.95 during premarket trading on Monday, according to market data.
