Tension between Russia and Ukraine threatens bullish cycle

After a fall amid international pressure, the Brazilian Stock Exchange fluctuated this Friday (18), at risk of losing the chance to close higher for the sixth consecutive week. At 12:54 pm, the Ibovespa dropped 0.20% to 113,290 points. The commercial dollar retreated 0.75%, to R$ 5.1280, momentarily returning to the lowest level in almost seven months.

The Brazilian stock market even spent part of the morning in the blue, but lost strength after the opening of the stock exchanges in New York. The American market assumed a negative bias in the first hour of trading. The Dow Jones, S&P 500 and Nasdaq indexes dropped 0.24%, 0.36% and 0.85%, respectively.

The day before, the Brazilian stock market benchmark had closed down by 1.43%, interrupting a cycle of seven consecutive daily highs. Pressure from China, which investigates alleged irregularities in iron ore prices, hampered the performance of shares in the mining and metallurgy sectors, one of the most important on the Brazilian stock exchange.

As a backdrop, this week’s scenario is unfavorable for stock markets across the world. Investors are averse to investing in stock exchanges for fear of the impact that companies could suffer if tensions between Russia and Ukraine escalate.

A war in Europe could prolong already high inflation in developed economies, Hani Redha, a portfolio manager at PineBridge Investments, told The Wall Street Journal.

This risk exists because a conflict in the region would interrupt the supply of important commodities. Russia is among the world’s largest suppliers of oil and natural gas. But not only that. The country is a leading exporter of wheat and a major producer of metals such as palladium, aluminum and nickel.

“Inflation is really the big issue that will determine how markets behave and that only adds to the delay in resolving the inflation situation,” commented Redha.

Interruptions in the supply of inputs for the most varied industrial activities during the pandemic are among the main causes of the current global inflation, forcing the main central banks to discuss cuts in financial stimulus and interest rate hikes.

It is this discussion about monetary policy that is driving the global financial market and, in a way, temporarily benefiting Brazil.

Waiting for the effective start of monetary tightening, especially in the United States, large investors sell shares that have accumulated gains in recent years. Part of this capital is being directed to markets that were cheap, as is the case with Brazil.

Faced with the imminence of an armed conflict involving one of the greatest military powers, however, uncertainty can jeopardize this movement, which until then was favorable to Brazil.

In the oil market, the barrel of Brent dropped 0.27%, to US$ 92.72 (R$ 478.05). Advances in a deal on Iran’s nuclear program are fueling speculation about lifting restrictions on the country’s oil supply. This has been holding up commodity prices.