The Stock Exchange rose 0.40% this Wednesday (10), to 105,967 points, on a day when the market’s mood with the approval of the second round in the Chamber of the PEC of Precatório, a proposal that gives default on judicial debts of the Union, was contained by data releases on the acceleration of inflation in Brazil and the United States. The dollar rose 0.18%, to R$ 5.5010.
The Ibovespa, the benchmark of the Brazilian stock market, surpassed 107 thousand points during the trading session. The rise occurred while the market was still celebrating the advance of the PEC which, despite circumventing the spending ceiling, is evaluated by investors as a solution for the government to be able to pay the Auxílio Brasil of at least R$ 400 and, therefore, close the 2022 Budget.
Still in the morning, however, the Ibovespa came to be negative with the repercussion of high official inflation in the country, which accelerated to 1.25% in October. It is the highest rate for the month since 2002. Analysts are now forecasting a double-digit price increase for this year.
In the afternoon, the market began to digest the data on inflation in the United States, the highest in three decades. In the 12 months to October, the index increased 6.2%, the biggest annual increase since November 1990, after a 5.4% jump in September.
The advance of inflation could lead the Fed (Federal Reserve, the bank of the United States) to anticipate the increase of the basic interest, which would result in a capital flight towards the US Treasury bonds, comments Everton Medeiros, specialist at Valor Investimentos
“The market reached a high of 1.74%, but after the release of consumer inflation data in the US, expectations grew that the Fed anticipates an increase in interest rates,” he says.
Despite the volatility, the Stock Exchange maintained its upward bias. The end of the trading session, however, was marked by the repercussions of the drop in oil prices, bringing down Petrobras shares — preferred shares dropped 0.79% —, according to Rafael Ribeiro, investment analyst at Clear.
The barrel of Brent retreated 2.58%, to US$ 82.59 (R$ 450.80).
In addition, the shares of steelmakers retreated reflecting another day of devaluation of iron ore. “The commodity fell 4% at Qingdao port [na China], at $89 [R$ 486], with concerns about demand intensifying due to restrictions on steel production in China,” says Ribeiro.
Vale’s common shares yielded 0.38%.
Some vehicles even published that one of the Stock Exchange’s high periods during the afternoon was related to the favorable speech to the market by former judge Sergio Moro during the ceremony of his affiliation to Podemos.
Analysts consulted by the report said that, despite the coincidence as to the time of the speech and one of the peaks of the Ibovespa, it is not possible to say that Moro’s speech had an impact on the trading floor.
“While former judge Sergio Moro was making his speech, the Stock Exchange really surpassed the maximums and the dollar retreated, but it is difficult to draw a causal link between these facts”, says Felipe Vella, technical analyst at Ativa Investimentos.
“We definitely can’t say that Moro’s speech made a price because the day was marked by several news that excited the market regarding the possibility of a quick conclusion of the approval of the PEC dos Precatórios,” says Camila Abdelmalack, chief economist at Veedha Investimentos.
One of the main responsible for positive fluctuations on the Stock Exchange on Wednesday was Bradesco, whose shares rose 5.65% after the bank’s chief executive, Octavio de Lazari, estimated growth in fee income above inflation in 2022. Itaú Unibanco advanced 2.53%.
On Wall Street, the Dow Jones, S&P 500 and Nasdaq indices dropped 0.66%, 0.82% and 1.66%, respectively.
Fears of an accelerated rise in benchmark interest rates by the Fed also dampened market appetite for risky investments, as treasury-linked safe investments could become more attractive.
“Although the Federal Reserve believes inflation is transient, the evidence is starting to show that this is not true,” said Rick Meckler, a partner at Cherry Lane Investments.
“The Fed has made few moves outside of what they told the markets they plan to make, but I think even they might be a little worried about the strength of the increase.”
with Reuters
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