Stock drops 6.7% in October with fiscal risk; Petrobras collapses after Bolsonaro speeches

The Brazilian Stock Exchange fell 2.09% this Friday (29), ending the month with 103,500 points. It is the worst monthly closing since November 2020.

October also accumulates a low of 6.74%, reflecting the market’s nervousness over the increase in fiscal risk. In 2021, losses reach 13.04%.

The dollar rose 0.28% this Friday, to R$ 5.6420. In the month, the US currency appreciated by 3.72% against the real.

Market perceptions of the imbalance in public spending worsened significantly last week, when the Jair Bolsonaro (non-party) government revealed its intention to circumvent the spending ceiling to expand the new Bolsa Família, Auxílio Brasil, in the 2022 election year .

So far, the government has not been able to move forward with the PEC (proposed amendment to the Constitution) of precatório, presented by Planalto as a solution to accommodate part of the extra expenses to close next year’s Budget. The continual postponements of discussions in Congress add to the climate of uncertainty.

According to analysts, this week’s results for the Brazilian stock exchange and dollar denote the loss of confidence in the Central Bank’s ability to do what is necessary to contain the inflationary process, even after the monetary authority raised the Selic rate to 7.75% a year. year last Wednesday (27).

“In addition to the macro background, I believe that the market movement shows a clear loss of confidence in the BC, which is behind the curve in the interest rate hike process and should have explained a harsher tone in its statement after the hike decision 1.5 percentage point in the Selic rate,” wrote Dan Kawa, from TAG Investimentos.

Petrobras shares fall on fear of government intervention

On Friday’s trading session, the Ibovespa, the Stock Exchange’s benchmark index, was pulled down by the poor performance of Petrobras and the mining and metallurgy sectors.

Preferred (PETR4) and common (PETR3) shares sank 5.90% and 6.49%, respectively, despite the profit of R$ 31.1 billion in the third quarter of 2021 and the decision to double the value of dividends distributed to its shareholders announced by the company the day before.

The company’s profit was the target of criticism from Bolsonaro the day before. Suffering from the impact of rising fuel prices on its popularity, the president said that the state-owned company “has to be a company that makes a profit that is not as high as it has been”.

Analysts said the president’s statements raised investor fears about government intervention in the company’s pricing policy, especially against a backdrop of rising dollar and oil prices.

“The market really liked Petrobras’ results, but the president’s declaration of interfering in some way in the pricing policy is what scares the market,” says Romero Oliveira, head of variable income at Valor Investimentos.

Brent oil, a reference for this market, rose 0.06% this Friday, to US$ 84.37 (R$ 476.04).

Commodity prices recovered throughout the day, supported by the expectation that there will be no increase in production by OPEC (Organization of Petroleum Exporting Countries), Russia and its allies.

The weak performance of shares of companies linked to the steel industry reinforced the fall of the Stock Exchange this Friday, with emphasis on Vale (VALE3), which fell 2.84% and was among the most traded of the day.

The mining company reported growth in the third quarter of 33.6% compared to the same period last year, but in relation to the immediately previous quarter, there was a drop of 48.7% in the result.

The company has been losing gains with the devaluation of iron ore due to the economic slowdown in China, the main buyer of the commodity produced by the Brazilian.

The day before, there was a 4.25% devaluation in the price of iron ore with 62% purity traded in cash at the port of Qingdao, in China. The input futures contracts also retreated.

With results also affected by the expected reduction in steel consumption in China, Usiminas (-7.54), CSN (-5.24%) and Gerdau (-1.82%) closed low, which led and led the list losses in the trading session.

Among the most traded papers, the positive highlight was Suzano, which closed up 0.65%. The company presented an increase in the operating result of the third quarter and expansion of about 11% in the capacity of its future factory in Ribas do Rio Pardo (MS). Suzano executives said they expect stable production costs in the coming quarters and recovery in China.

In a note to clients about the closing of the market, Ativa Investimentos reinforced that the domestic difficulties once again kept the Brazilian stock market detached from the positive performance abroad.

In the United States, the Dow Jones, S&P 500 and Nasdaq indices advanced 0.25%, 0.19% and 0.33%, respectively.

The rally could have been greatest on Wall Street, where the frustrating results of Apple and Amazon’s balance sheets pressured negatively. Even so, the S&P 500, a reference for the American market, and the Nasdaq, which concentrates technology companies, accumulated monthly gains of 6.91% and 7.27%, respectively.

with Reuters