New variant and monetary tightening in the US leave the Stock Exchange close to losing 100,000 points

The Brazilian Stock Exchange came close to closing below 100,000 points this Tuesday (30), in a day of concern about the effectiveness of vaccines in controlling the Covid-19 pandemic and with the signal that the Fed (Federal Reserve, the US central bank) could accelerate the end of its emergency asset-buying program and anticipate the rise in US interest rates, which would reduce the availability of money for investments in global stock markets.

The Ibovespa closed down 0.87% to 101,915 points. The retreat in November was 1.53%, and for the fifth time in a row the index ends a month in the red. The last monthly increase, of 0.46%, occurred in June. Since then, the country’s stock market has already sunk by 19.63%.

This Tuesday’s result also renews the index’s worst daily mark since November 6, 2020, when it closed at 100,925 points.

In the day’s low, the Ibovespa retreated to 100,074 points. Since November 4, 2020, the Stock Exchange has not closed below 100,000 points, a mark reached for the first time in a trading session on June 19, 2019.

The dollar rose 0.42% to R$5.6370, reflecting expectations of a global appreciation of the currency due to a possible change in US monetary policy.

Following the falls in the markets of Asia, Europe and the United States after a new alarm about the risks of the new variant of the coronavirus, the Brazilian stock exchange spent most of the day negative.

Investors were shaken by the statement by the president of the pharmaceutical company Moderna, Stéphane Bancel, on the possibility that the existing Covid-19 vaccines are not as effective against the omicron variant as they are against the delta.

“There is no world, I think, where [a eficácia] it is on the same level as we had with delta,” Bancel told the Financial Times newspaper.

The environment for equity investments worsened throughout the day after Fed Chairman Jerome Powell said the US monetary authority will discuss accelerating the reduction in its bond purchases at its next meeting.

Since the beginning of the pandemic, the central bank of the United States has been buying assets, in addition to keeping basic interest rates practically zero, as a way of increasing liquidity and, thus, reducing the effects of the crisis generated by the pandemic.

With the economic recovery and inflation picking up, the Fed began a slow and gradual withdrawal of these stimuli to try to slow the rise in prices.

Powell’s statement surprised the market because news about the new variant of the coronavirus led investors to bet that the American authority could even further slow down the withdrawal of incentives.​

Inflationary pressure will force the Fed to end a liquidity supply cycle that dates back to the 2008 US housing crisis, said Luis Stuhlberger, manager of Verde Asset Management, as he charted a scenario for 2022 during an event by the Inversa analyst firm. .

For Stuhlberger, the bill seems to have arrived and is represented by the drop in popularity of American President Joe Biden, largely due to inflation, which takes away the purchasing power of the population. “This is a warning that the central bank [americano] can’t do everything,” he said.

US stock indices closed sharply down. Dow Jones, S&P 500 and Nasdaq yielded 1.86%, 1.90% and 1.55%, respectively.

In Europe, the London, Paris and Frankfurt stock exchanges fell 0.71%, 0.81% and 1.18%, respectively. The Euro Stoxx 50 index, which tracks 50 of the region’s top companies, lost 1.13%.

In Asia, the Tokyo and Hong Kong stock exchanges closed down 1.63% and 1.58% each. The index for Chinese companies in Shanghai and Shenzhen dropped 0.40%.

International events put in second place the progress of the PEC (Proposed Amendment to the Constitution) of the Precatório in Congress, whose delay in completion is one of the main reasons for the Ibovespa’s losses throughout the month.

For Stuhlberger, from Verde, the government would have avoided part of the deterioration of the Ibovespa if it had already sold to the market the proposal that is being analyzed by Congress today. “Now it’s that story, the toothpaste came out of the tube, and you can’t put it back in.”

Criticisms by former president Luiz Inácio Lula da Silva (PT) about Petrobras’ pricing policy still made less significant contributions to the negative result in the country’s stock market.

The index reached the day’s low, however, at 2:09 pm, shortly after Lula’s statement about his intention to change the state’s current pricing policy began to circulate in the press.

“I say it loud and clear: we are not going to maintain this policy of rising prices for gas and gasoline that Petrobras has adopted because it has leveled out prices on the international market. The Brazilian people have to profit from Petrobras,” he said Lula in an interview with Rádio Gaúcha.

Analysts assess that the statements have little participation in the negative results of Ibovespa and Petrobras.

Felipe Vella, from Ativa Investimentos, attributed the losses to fears of a new economic slowdown caused by the omicron variant, combined with the increase in risk aversion caused by the Fed’s (Federal Reserve) statement about a faster withdrawal of economic stimulus in the United States.

Rodrigo Crespi, from Guide, highlighted that the global context brought down the price of oil, harming companies linked to the commodity.

“What weighs much more at Petrobras is the drop in Brent oil, which broke the barrier of US$ 70 (R$ 393.35) per barrel, which ended up affecting the entire sector linked to the commodity listed on the Stock Exchange” , it says.

At the end of the day, oil closed down 3.91% to US$ 70.57 (R$ 396.55).

Petrobras’ preferred shares fell 0.14%, accounting for the largest volume of trading on the Stock Exchange.

Itaú Unibanco and Bradesco dropped 1.24% and 1.78%, respectively.

Vale rose 0.65%, responding to the high in the iron ore futures market. The biggest high of the day was CCR, which advanced 6.95%.

Lucas Bombana collaborated