Stock rises 0.72% waiting for definition on PEC of Precatório

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The Brazilian Stock Exchange closed up 0.72% this Tuesday (9), at 105,535 points, and the dollar gave up 0.92%, quoted at R$ 5.4910. Analysts attribute the results to the optimism of investors with the expectation of approval in the second round of the PEC (Proposed Amendment to the Constitution) of the Precatório, which defaults on judicial debts of the Union, whose vote takes place this Tuesday.

The PEC creates conditions for President Jair Bolsonaro (no party) to pay Brazil Aid of at least R$400 by the end of 2002, the year in which he should seek re-election, without him having to give up other expenses. The proposal was approved in the first round in the Chamber.

The measure is criticized for being a dribble in the spending ceiling, but it has been tolerated by the market, which considers the expansion of expenses without this counterpart an even greater threat to the country’s fiscal balance.

This Tuesday afternoon, however, the STF (Supreme Federal Court) formed a majority to suspend the rapporteur’s amendments, handled by government officials with the support of the Planalto Palace on the eve of important votes for the Executive. The setback suffered by the government near the closing time of the trading session was not enough to reverse the rise in the Stock Exchange.

“The market is waiting for the approval of the PEC and any result different from that should bring greater pressure on the fiscal path”, says Rafael Ribeiro, an investment analyst at Clear.

The DI (Interbank Deposits) interest rate for January 2023 dropped 0.06 percentage points, to 12.15% per year.

With the decline in reference interest rates for short-term contracts, investors sought business in the retail sector, boosting Magazine Luiza (9.81%) and Americanas (7.71%), which had the highest increases in the trading session.

Analysts also attribute the less pessimistic scenario to statements by the director of monetary policy at the Central Bank, Bruno Serra, which reinforced the authority’s commitment to controlling inflation.

In an interview published this Monday by Nikkei Asia, Serra stated that the Copom (Monetary Policy Committee) may raise the Selic rate by more than 1.5 percentage points in December.

“If it is necessary to raise the interest rate by more than 150 basis points, we will do so,” said Serra.

The balance sheet season also helped boost the stock market, as was the case with Banco do Brasil, which posted net income of R$ 5.1 billion in the third quarter, 48% above the same period in 2020, said Alexsandro Nishimura, partner at investment office BRA.

The political scenario, however, continues to generate uncertainty and removes the appetite of investors, who are waiting for a solution for the 2022 Budget, emphasizes Nishimura.

“Even with this Tuesday’s high, the Ibovespa remains oscillating in a narrow range since the last trading session of October. The market defends an important technical support given by analysts, at 103,000 points, but takes profits as soon as the index reaches 106,000 points,” says the analyst.

Petrobras shares (PETR4), which rose 2.14%, pulled the list of the most traded shares of the day. The state-owned company responded to the rise in oil prices on the international market. The barrel of Brent advanced 1.77%, to US$ 84.91 (R$ 466.58).

Vale (VALE3) fell 2.44%, in another day of low iron ore prices.

In the United States, after recording record gains, the Dow Jones, S&P and Nasdaq indices retreated 0.31%, 0.35%, and 0.60%, respectively.

“We’ve had an incredible succession of rallies, so letting some air out of the balloon is perfectly fine,” said Ryan Detrick, chief market strategist at LPL Financial.

“It’s a reminder that stocks can’t go up every day,” added Detrick.

Investors also operated with an eye to the US Department of Labor’s producer price report on Tuesday that inflation continues to rise due to shortages in the supply of goods and labor.

(With Reuters)

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