Stocks have second week of rise as Wall Street sinks

The Brazilian Stock Exchange reached its second weekly high. Local stocks, whose prices were heavily discounted, benefited from foreign investors looking for opportunities amid repeated lows on Wall Street, where two of the three main indexes had their worst week since the start of the pandemic.

The Ibovespa advanced 1.88% this week, despite having closed the trading session this Friday (21) with a drop of 0.15%, at 108,941 points. The benchmark index of the Stock Exchange accumulates a high of 3.93% in 2022.

The dollar closed the session up 0.70%, at R$5.4550. In the week, however, it accumulated a drop of 1.05%. The exchange rate also reflected the flow of capital from abroad.

Vitor Carettoni, director of the variable income desk at Lifetime Investimentos, highlighted among the main examples of foreign interest in Brazil the investment of R$ 5.9 billion by GQG Partners in Itaú shares, as announced to the market by the Brazilian bank on this Thursday (20).

“The month of January already has a record of foreign investments, with R$ 15 billion contributed”, said Carettoni. “It looks like a classic portfolio rebalancing move,” he commented.

Investors seek to reposition themselves in global markets in the face of expectations that the main stock exchanges in the United States and Europe will far from repeating the gains recorded in 2021. This is what is expected amid repeated promises of monetary tightening to contain the escalation of inflation. .

The Brazilian stock exchange, however, closed last year against the main economies. Therefore, despite the various risks that an election year poses to the stock market, the country is also seen as a momentary opportunity for gains.

“Brazil’s risky assets ended last year very discounted in relation to abroad”, summarizes Daniel Miraglia, chief economist at Integral Group.

The two consecutive weekly highs cannot be seen as a trend, according to the analyst. “We think that this is a short-term flow, the so-called hot money, which is money that flows in and out quickly”, commented Miraglia.

Braulio Langer, an analyst at Toro, drew attention at the beginning of this Friday’s session to the possibility of liquidations of securities that had strong growth in recent days, which could lead the Ibovespa to close the trading session down, as actually happened. .

Increases in iron ore contracts, which had been boosting the domestic market, did not have the same positive effect on Friday.

Despite the maintenance of the commodity’s high, Vale, the main exporter of this material, closed down by 2.08%. The company made the main negative contribution to the Ibovespa.

Still in the commodities sector, there was a pause in oil valuations. The barrel of Brent, world reference, retreated 0.70%, to US$ 87.76 (R$ 474.33) at the end of this Friday.

The commodity’s fall, driven by the momentary increase in global inventories, did not change analysts’ assessment that the shortage in supply will continue to drive prices higher. The possibility of an invasion of Ukraine by Russia, one of the biggest producers of the oil, reinforces the expectation of an increase.

In the domestic scenario, investors are following the movement around the 2022 Budget, which must be sanctioned by President Jair Bolsonaro, highlighted Nova Futura. The deadline for sanctioning the Budget ends this Friday.

Discussions about the inclusion of readjustments due to federal employees are among the market’s concerns about the country’s fiscal balance. Bolsonaro faces a protest from the civil service after he promised a raise for federal police officers.

Abroad, the day was one of generalized decline in stock markets, with emphasis on the sharp declines in the United States.

In addition to some disappointing company balance sheets, as happened with Netflix, investors are apprehensive about the outcome of the Fed meeting (Federal Reserve, the American central bank) next Wednesday (26).

To contain the highest inflation in four decades, the Fed is expected to start a series of four hikes in the country’s basic interest rates in March.

Higher interest rates make US Treasuries more attractive and, as a result, reduce interest in the much riskier stock market. But, in addition, they also increase the operating costs of companies in capital formation.

This is the case for many of the companies listed on Nasdaq, the exchange that concentrates medium-sized companies in the US technology sector.

The Nasdaq index plunged 2.72% this session. The S&P 500, which is the benchmark for the American market, dropped 1.89%.

Both had their worst weekly performance since the fall caused by the beginning of the pandemic in March 2020, highlighted the Wall Setreet Journal. The Nasdaq’s weekly drop was 7.55%. The S&P 500’s, up 5.68%.

The Dow Jones index, the most traditional in the country, closed the day with a strong drop of 1.30%. The weekly drop reached 4.58%.