Dollar rises sharply on expectation of release of Fed minutes

The dollar opened this Wednesday (17) sharply higher against the Real, with investors showing caution ahead of the release of the minutes of the Fed’s last monetary policy meeting (Federal Reserve, the American central bank) and keeping an eye on domestic political developments. after the official start of the presidential election campaign.

At 9:07 am, the spot dollar advanced 0.95%, at R$5.1894 on sale, while the first-maturity dollar futures contract rose 0.75%, at R$5.2120.

In this trading session, the Central Bank will auction up to 8,910 traditional foreign exchange swap contracts for the purpose of rolling over the maturity date of September 1, 2022.

In the last session, the dollar operated higher against the real since the opening of business, and began to advance even more strongly in the morning, closing the business with a valuation close to 1%.

The American currency closed the day up 0.94%, quoted at R$ 5.1400 for sale.

The risk of a global economic recession abroad, and the uncertainties about the political scenario with the approach of elections in Brazil, contributed to the feeling of caution among market agents.

A Bank of America August survey released on Tuesday showed that fund managers in Latin America are more concerned about plans for Brazilian fiscal policy after the elections, and more of them expect the financial market to react to the results. from polls of voting intentions to the elections.

About 75% of respondents said they expect repercussions on financial assets from the election poll numbers, against less than 70% in the July report.

At the same time, more than 60% said they were concerned about post-election fiscal policies, compared with less than 40% in the previous poll.

Regarding the exchange rate, most expect the dollar to be between R$4.81 and R$5.40 at the end of this year. The breakdown of the data shows that more than 45% of those surveyed project the dollar between R$4.81 and R$5.10, while about 40% see the rate between R$5.11 and R$5.40.

The global scenario also weighed heavily on the new appreciation of the dollar, with investors alert to the risk of a slowdown in the economy, whether due to the increase in interest rates underway in the United States by the Federal Reserve (Fed, American central bank), or the zero covid policy. in China.

Against this backdrop, oil prices fell by about 3% on Tuesday, to the lowest level since before Russia’s invasion of Ukraine.

Brent crude futures fell $2.76, or about 3%, to $92.34 a barrel. The contract hit a session low at $91.71 a barrel, the lowest since February 18.

In the American stock exchanges, the session was marked by strong volatility, with the main stock indices closing their business without a clear defined trend.

The Nasdaq, with the highest concentration of technology stocks, closed slightly down 0.19%. The S&P 500 and Dow Jones indexes ended up 0.19% and 0.71%, respectively, boosted by retail companies such as Walmart, which saw shares rise about 5%.

Walmart said on Tuesday it had raised its full-year profit forecast, partially reversing a hefty cut less than a month ago, as inventory clearance discounts and lower fuel prices helped the retailer outsell the market. expected.

Walmart now expects its adjusted earnings per share for the current fiscal year to decline by 9% to 11%.

Last month, the biggest U.S. retailer spooked markets around the world when it estimated an 11% to 13% drop — it had previously forecast a 1% decline — and warned that consumers were cutting back on discretionary shopping in a much faster pace than feared.

In Asia, the main stock exchanges closed down, with a 1.05% drop in the Hang Seng, from Hong Kong, and 0.19% from the CSI 300, from China.

Beijing’s strict policy to fight Covid is identified as the main cause for the loss of breath of industrial activity in July, in addition to a persistent crisis in the country’s real estate sector.

Local stock rises to highest level since April

On the Brazilian stock exchange, the Ibovespa index fluctuated between highs and lows throughout the session, but ended the day with gains of 0.43%, at 113,512 points, the highest closing level since April 20 (114,343 points).

Among the papers that contributed to the rise in the index, the highlight was the commodity exporters.

Vale’s shares rose 2.42%, while Petrobras’ common shares advanced 1.15%, and preferred shares, 0.91%, after the oil company announced a further reduction in the price of gasoline the day before.

In a note released shortly after Petrobras’ announcement, Ativa Research assessed that the price reduction movement is consistent with the drop in oil prices and exchange rates observed over the last few weeks.

“Although, according to our calculations, we did not see room for a reduction of this size [no preço da gasolina]we believe that the market will not challenge the oil company’s decision,” he said.

For the Goldman Sachs bank, Petrobras will start selling gasoline below the international parity after the cut, but they consider that the company’s margins with the fuel remain above the 2021 average.

“This leads us to believe that Petrobras’ consolidated refining margins remain at a healthy level,” said analysts Bruno Amorim, João Frizo and Guilherme Costa Martins.

Large banks, with relevant weight in the local market, and which reported a 20.5% increase in profit in the second quarter, also contributed with gains to the Ibovespa. Bradesco’s shares advanced 1.44%, while Itaú’s rose 1%.

Among the biggest drops of the day, Yduqs shares fell 11.76%, after the company reported a loss of BRL 63.3 million in the second quarter the day before, reversing the positive result of BRL 116.5 million obtained in the same period of 2021.

Nubank and Inter soar on American stock exchanges

With shares traded on the American market, Nubank and Inter’s shares soared 17.7% and 10.4%, respectively, after the two digital banks reported quarterly results, even as analysts drew attention to the deterioration in credit quality.

Nubank reported a 230% jump in total revenue to $1.2 billion in the second quarter, when it posted adjusted net income of $17 million. The bank also named Youssef Lahrech as chairman, but founder David Vélez remains chief executive (CEO).

Citi analysts noted that, in terms of key metrics, it was a “solid quarter” for Nubank, with revenue performance highlighted. They, however, assess that the investor may continue to have doubts about personal loan originations and defaults, among others.

Itaú BBA also highlighted the performance of revenue, but noted relevant signs of deterioration in credit quality and challenges for personal loan growth.

Inter, in turn, had net income of R$16 million in the second quarter, with net revenue from services advancing 91%, to R$316 million.

UBS BB said the bank delivered a result with modest earnings and diverging operating trends, with decent revenue expansion but deteriorating asset quality.

Citi analysts said they believe that strong growth in the credit card portfolio should continue to lead to higher delinquencies and, consequently, higher risk costs, postponing a potential improvement in the bank’s profitability.

with Reuters