Stock closes with a strong increase after approval of the PEC of Precatório in the Senate

The Brazilian Stock Exchange showed a strong recovery this Thursday (2) after the approval in the Senate of the basic text of the PEC (proposed amendment to the Constitution) of the Precatório. The bill will need to have parts voted again in the Chamber because it was modified by the senators.

The Ibovespa, a reference for the country’s stock market, rose 3.66%, to 104,466 points. The dollar retreated 0.21%, to R$ 5.6590. The day before, doubts about the approval of the amendment contributed to the index falling to its worst score in a year.

The financial market evaluates the PEC as an alternative for the 2022 Budget to include the Brazilian Aid of R$ 400, making the fiscal scenario for the next year less unpredictable.

The most traded shares in the Brazilian market had significant gains after voting on the text, with highlights for Petrobras (7.05%), Vale (4.02%) and Bradesco (4.39%).

Petrobras was also boosted by rising oil prices, with a barrel of Brent rising 1.64% to US$70.00 (R$394.37).

Despite allowing a dribble in the spending ceiling and a default on judicial debts of the Union in 2022, the PEC reduces the fear of investors regarding the possibility of President Jair Bolsonaro resorting to extraordinary measures and without counterparts to guarantee the distribution of the benefit to the population in the year he will seek re-election.

Rodrigo Crespi, an analyst at Guide Investimentos, considers that there is a movement to correct the value of assets more linked to the domestic economy, which were excessively depreciated due to the risk of imbalance in public accounts. “The PEC got out of the way and this reduced the uncertainties”, he commented.

With the proposal finally entering the voting agenda this Thursday, the optimistic environment led the Stock Exchange to operate at a high since the opening of trading, with investors putting in the background data that renewed the signs of loss of breath in the country’s economic activity.

The GDP (Gross Domestic Product) retreated 0.1% in the third quarter of 2021, compared to the three immediately previous months, released the IBGE on Thursday. Analysts consulted by Bloomberg projected zero variation (0%). This is the second fall in a row for the indicator.

In the view of Rachel de Sá, Rico’s head of economics, the result puts the country in a technical recession, but it was close to expectations and does not bring significant changes to the market.

“For investors, especially individuals, this drop should not have major impacts on investment strategy,” said the analyst.

For the IBGE and other analysts, it is not yet possible to speak of recession, but of stagnation.

The strong rally in the US stock market, after fears over the new variant of the Covid-19 virus sparked a selloff the day before, added to the optimism of the domestic market.

The Dow Jones, S&P 500 and Nasdaq indices rose 1.82%, 1.42% and 0.83%, respectively.

Figures on a slowdown in jobless claims in the US cheered investors on the country’s economic recovery.

Initial requests for aid soared by 28,000 to 222,000, the Department of Labor said Thursday. Economists consulted by Reuters predicted 240,000 orders. Layoffs in November fell to the lowest number in 28 years.

In Europe, however, concerns about the advancement of the omicron variant have toppled markets. The London, Paris and Frankfurt stock exchanges fell 0.55%, 1.25% and 1.35%, respectively.

Asian markets closed mixed. The Tokyo Stock Exchange fell 0.65% after the government’s decision to close the country to bar the entry of the omicron variant. The indices of Hong Kong and Shanghai/Shenzhen rose 0.55% and 0.25%.