On a day when interest rate hikes are expected to be announced in Brazil and the United States, investors are preferring to see the glass as half full. News of China’s decision to launch an economic stimulus package and progress in negotiations for a ceasefire between Russia and Ukraine send the main stock exchanges up around the world.
At 12:15 pm, the Ibovespa rose 1.60%, to 110,698 points, partially recovering from four consecutive drops. The commercial dollar retreated 0.71%, to R$ 5.1240.
Major global stock indices also reflected optimism. In the United States, the Dow Jones, S&P 500 and Nasdaq indexes advanced 1.06%, 1.73% and 2.68%, respectively.
In Europe, the Euro Stoxx 50 indicator, which tracks 50 of the main companies located in countries that use the euro as their currency, soared 4.52%. The Paris and Frankfurt Stock Exchanges jumped 4.26% and 3.78%. London rose 1.62%.
Russia and Ukraine advanced in negotiations to reach a ceasefire in the invasion promoted by Vladimir Putin in the neighboring country, despite the continuity of Russian attacks in Kiev and other Ukrainian cities.
The Ukrainian president, the cornered Volodymyr Zelensky, said this Wednesday (16) that “the negotiations already sound more realistic”. Russian Foreign Minister Sergei Lavrov said there is hope that Ukraine will definitively reject the possibility of joining NATO (the western military alliance), Moscow’s main demand to end the war.
The conflict in Eastern Europe, which will complete three weeks this Thursday (17), has been causing losses in the stock markets. The main fear is worsening global inflation due to oil shortages. Russia, which is one of the main producers, is prohibited from exporting the raw material to the United States.
On Wednesday, a barrel of Brent oil was traded at US$ 98.40 (R$ 504.87), a drop of 1.51%. The day before, the commodity closed below US$ 100 for the first time in 11 sessions.
Although oil’s soaring to the highest prices in 14 years in the last three weeks is directly linked to the war in Ukraine, it was the Covid outbreaks in China that caused a drop of more than 10% in the international price of the last two days.
The sector fears that new stoppages of economic activities to contain the virus in China will harm supply chains, as happened at the beginning of the pandemic.
On Wednesday, however, the news about China is encouraging for the market. Beijing’s State Council has pledged actions to maintain market stability. The possibility of a stimulus injection boosted the main Asian stock exchanges.
Since the beginning of the war in Ukraine, on February 24, the benchmark index of the Brazilian Stock Exchange has already dropped 1.09%.
The Hong Kong Stock Exchange ended the session up 9.08%. The main index of companies in Shanghai and Shenzhen jumped 4.32%. In Tokyo, the Nikkei index gained 1.64%.
In the negative part of the economic news, the Fed (Federal Reserve, the American central bank) is expected to announce a 0.5 percentage point hike in its interest rate this Wednesday. It is the first time that the US reference rate has been raised since the beginning of the pandemic, a period in which it remained practically zero.
The measure has the potential to draw liquidity from stock markets and raise exchange rates in emerging economy countries, such as Brazil. Click here to understand how rising interest rates in the US can affect the Brazilian economy.
In Brazil, the Copom also decides this Wednesday how much the basic interest rate will go. Currently, the Selic is at 10.75% per year. Analysts estimate that the increase will be at least 1 percentage point.
The market will still have to deal this Wednesday with the threat of a default by Russia. The country has its first bond maturity since having its assets abroad frozen by international sanctions.
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