Investors started the week by liquidating shares on the Brazilian Stock Exchange, whose main index, the Ibovespa, dropped 1.10%, to 107,773 points, at 11:31 am this Monday (24). The dollar rose 0.48% to R$5.48. After two weeks with highs against the lows abroad, the correction of the domestic market is expected by analysts.
Indigestible news for global business is expected in the coming days. The main one may be the pronouncement of the Fed (Federal Reserve, the American central bank) this Wednesday (26).
The monetary authority should announce the next steps of its actions against inflation in the United States. Fears of aggressive interest rate hikes have been pushing down Wall Street’s main indexes since late last year.
Russia’s military deployment near Ukraine’s border also worries investors. NATO (Western Military Alliance) has announced the strengthening of Eastern Europe’s defenses against what it considers an imminent threat of invasion.
Analysts assess that a possible crisis involving Russia, one of the largest oil producers, could raise the price of the commodity on the international market. This raises the risk of inflation and, consequently, of rising interest rates. The crisis may, however, benefit shares of Brazilian exporters.
The barrel of Brent, world reference, retreated 1.01%, at US$ 87 (R$ 474.33). The price remains at the highest level since the second half of 2014.
The biggest negative pressure for the opening of the Ibovespa this week, however, came from the fall in iron ore contracts, contrary to the upward movement of recent weeks that boosted the domestic market. Vale exerted the greatest negative pressure on the stock exchange this Monday.
In the political scenario, President Jair Bolsonaro (PL) kept in the 2022 Budget a reserve of R$ 1.7 billion to readjust civil servants’ salaries. Bolsonaro had promised to give the raise to federal police, a category that belongs to his electoral base. This promise has generated mobilizations from various sectors of the civil service.
Increases in public spending could put pressure on the stock exchange and exchange rates due to investors’ perception of the growth in fiscal risk, that is, that the country will have difficulty meeting its budget.
Last week, the Brazilian stock market 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 month of January has been showing a record of foreign investments, with around R$ 15 billion contributed. Analysts assess that there was a movement to rebalance the portfolio abroad.
Investors are looking to reposition themselves in global markets in the face of expectations that the main US and European exchanges will be far from repeating the gains recorded in 2021.
Daniel Miraglia, chief economist at Integral Group, warned that the Ibovespa’s two weekly rises in a row cannot be seen as a trend. He believes the gain will be short-term.
Settlements of securities that have seen strong growth in recent days are, therefore, to be expected.
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