Profit of stock exchange companies, appreciated ruble and what matters in the market

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Commodities pull profit on the stock market

While stocks follow the volatility of local and international markets, the group of companies on the Brazilian stock exchange recorded in the first quarter of 2022 a profit almost 85% above the same period last year.

In numbers: the consolidated profit was BRL 170 billion from January to March this year, against R$ 92.5 billion in the same period of 2021 (without considering inflation). The survey is from the Economatica platform.

What explains: a good part of this growth is due to large commodity exporters, especially Petrobras, Vale and Suzano, which also tend to dictate the direction of the Ibovespa’s performance (they are almost 29% of the index)

• The beginning of the year was marked by the appreciation of raw materials in the context of the war in Ukraine.

• Despite the generalized growth, he points out that companies are wary of taking on debt in a scenario of high interest rates. This helps explain why the rise in profits doesn’t reach the real economy through investment.

Highlights in the last quarter:

• Positives: the results of the banks pleased analysts with the growth of the loan portfolio in a scenario of higher Selic. Shopping malls and car rental companies also came in with numbers above expectations.

• Negatives: sectors that had their margins compressed by inflation were the ones that suffered the most, especially large retailers, civil construction and consumer companies.

Unemployment recedes; income is still weak

The unemployment rate fell again in the country and reached 10.5% in the quarter ended in April. Workers’ income, however, still signals fragility. The data were released by the IBGE this Tuesday (31).

In numbers: the unemployment rate is the lowest since 2015. Market analysts had expected a higher level, with a rate of 10.9%.

• The number of unemployed fell to 11.3 million and the share of people employed with some type of work was estimated at 96.5 millionrecord for the series started in 2012.

What explains: the experts heard by the Sheet attribute the better-than-expected result to the heated economic activity in the first months of this year.

• The economy’s performance in the first quarter will be consolidated with the release of GDP on Thursday (2) and should show a stronger rise than initially projected. For the second half of the year, however, the increase in interest rates should weigh on activity.

Income remains low: the recovery of unemployment was accompanied by income from work that was still fragile, with a fall in 7.9% compared to April 2021. The trend has been observed in the latest releases.

• The average index of BRL 2,569 in real terms (discounting inflation) in the quarter ended in April is the lowest for that period in the series.

Opinion: GDP improved, but few people felt it in their pocket, skin or soul, writes columnist Vincius Torres Freire.

breakfast inflation

Having breakfast became even more expensive than the average inflation faced by Brazilians.

While the 12-month IPCA up to April was at 12.13%the price increase for breakfast items was 32.16% in the same period, according to a study by PUC-PR.

What explains: the rise in items such as bread and margarine follows the above-average advance observed in food, which became more expensive with the rise in commodities –such as wheat, in the case of bread– and after adverse weather conditions in the countryside.

• In the set of products of the basic basket, the advance in the 12 months ended in April was 28.9%.

Carioca beans also shoot: the type of beans preferred by Brazilians will become more expensive in the face of lower supply in 2022.

• The drop in the planted area and occurrences of drought and frost should increase the prices of the item. Demand must be shifted to black beans, which cost less.

More about inflation

The president of the Central Bank, Roberto Campos Neto, defended this Tuesday the recent highs of the Selic in the face of inflationary pressure in energy and food and the high prices spread in other sectors.

Ruble is the most appreciated currency in the year

After seeing your value sink to a pittance 0.7 cents dollar in March, the ruble, the Russian currency, has recovered and is now trading at 16 cents. The price is even above that recorded before the war.

In numbers: only in the month of may the ruble appreciated 16.5% against the dollar, being by far the currency that appreciated the most in the period. Then comes the Colombian peso (5.1%) and the Brazilian real (3.82%), which recorded the highest appreciation for the month since 2009.

What explains: the appreciation of the Russian currency is the result of the Kremlin’s drastic capital control measures.

• The requirement of immediate conversion from dollars to rubles by exporters and the imposition of a limit on citizens to make transfers abroad are some examples.

• Also helping was Russia’s requirement that natural gas buyers pay in rubles, not dollars or euros. Germany, for example, was forced to accept such an imposition given its dependence on this type of energy.

Not necessarily good: analysts point out, however, that the appreciation of the ruble does not indicate an improvement in the Russian economy affected by sanctions, nor do they measure the effectiveness of punishments.

• The effect may even be the opposite, making Russian exports less competitive than those made by countries that have a less valued currency.

More on effects of war

Faced with the European sanction to about two-thirds of Russian oil purchased by the bloc, OPEC members are considering suspending the country from its agreement for the production of the commodity, according to the Wall Street Journal.

This could make the organization’s other countries, such as Saudi Arabia and the United Arab Emirates, expand their production to meet the established goal.