Minor omicron signals return to lift markets

Statements from health officials indicating that the omicron variant of the coronavirus may cause less severe symptoms than initially expected fueled another bout of strong gains in global equity markets.

Driven by global optimism, the Ibovespa, a reference on the Brazilian Stock Exchange, managed to sustain a rise of 0.65%, to 107,557 points, despite the loss of breath in the last hours of trading.

This is the fourth consecutive rise in the index, which has accumulated gains of 5.51% since the beginning of December. Until November, the stock market fell for five consecutive months.

The Dollar dropped 1.29% to R$5.6190, also following an increase in investor appetite for risky assets due to relief over fears over the new strain of Covid-19 virus. This is the biggest daily retreat of the American currency since November 11, when the currency dropped 1.76% against the real.

In the United States, the Nasdaq index soared 3.03%, while the Dow Jones and S&P 500 jumped 1.40% and 2.07%, respectively.

The main stock exchanges in Europe and Asia also closed in the blue.

London, Paris and Frankfurt advanced 1.49%, 2.91% and 2.82%, in that order. The Euro Stoxx 50 index soared by 3.36%.

In Tokyo, the increase was 1.89%. The Hong Kong Stock Exchange jumped 2.72%. The index that tracks companies in Shanghai and Shenzhen rose 0.60%.

In the oil market, the barrel of Brent advanced 2.76%, to US$ 75.10 (R$ 423.60). The appreciation of the commodity boosted the 1.63% increase in Petrobras’ preferred shares.

Also in the commodities segment, Vale advanced 0.74% after a day of appreciation above 5% in iron ore contracts for May 2022.

The gains are explained by China’s iron ore imports, which increased 14.6% in November compared to the previous month, reaching the highest level since July 2020, according to Clear Corretora.

Despite the absence of conclusive studies on the severity of the new strain, preliminary analyzes and statements from health authorities indicating that the strain may not be as lethal as previously thought are underpinning a strong asset recovery movement across the globe.

“It’s a rally of relief,” Fawad Razaqzada, an analyst at Think Markets, told the Wall Street Journal.

The leading infectious disease expert in the United States, Anthony Fauci, said on Tuesday that preliminary evidence indicates that the omicron variant is likely to have a higher degree of transmissibility but is less severe.

While more data is needed, early cases indicate fewer hospitalizations and patients less likely to need oxygen, Fauci said in a White House interview.

British drug maker GSK announced on Tuesday that the antibody-based therapy it developed in partnership with the US group Vir Biotechnology to fight Covid-19 is effective against all mutations in the new omicron variant of the coronavirus, citing new data from studies that are at an early stage.

Inflation and interest hamper Ibovespa’s recovery

Despite the impulse from global markets with the reduction in the risk perception of omicron and the gains in the commodities sector, the Ibovespa was not able to break the range of 109 thousand points in this session, a level that was lost on October 21 and which opened way to the region of 102,000 points in November, highlights Rafael Ribeiro, investment analyst at Clear. At the highest of the day, the index reached 108,655 points.

For the analyst, the stock market is still in a very short-term downtrend and may resume the fall given the resistance to recover recent losses.

“This repulsion to break the 109 thousand points can be explained by the interruption of the downward movement of the short part of the curve [de juros] in view of the latest inflation projections,” he says.

On Wednesday, the Central Bank’s Copom (Monetary Policy Committee) should announce an increase in the basic interest rate (Selic), which, according to market estimates, will be 1.5 percentage points. If this is confirmed, the rate will go from 7.75% to 9.25% per year.

In addition, the market still observes the outcome of the PEC dos Precatórios, which will be discussed again in the Chamber after being modified by the Senate.