Scholarship reaches a minimum in one year and the barrier of 100,000 points is threatened

The Brazilian Stock Exchange fell 1.39% this Wednesday (17), to 102,948 points, the lowest since November 12 last year. The devaluation this year reached 13.5% in 2021. The dollar rose 0.49%, to R$ 5.5260.

The Ibovespa, the country’s stock market reference index, has accumulated three consecutive drops and a drop of 4.32% since last Thursday (11). Analysts point to the scenario of fiscal uncertainty and the worsening economic outlook as the main causes of the deterioration.

In this trading session, other factors worsened the index’s performance, in particular devaluations in the commodities sector and a scenario of greater risk aversion abroad.

Stocks by meatpacking companies ended in decline after a proposal by the European Commission to ban the import of agribusiness products considered strongly linked to deforestation and forest degradation. Meatpackers Minerva, JBS, Marfrig and BRF dropped 3.34%, 1.73%, 1.09% and 0.62%, respectively.

“This has been announced for over a year and it makes it clear that we need to take a stand, it is a disaster for Brazil”, evaluates FGV (Getulio Vargas Foundation) professor Eduardo Assad, a specialist in agribusiness. “The industry has to stand up more clearly against the government’s stance, as colleagues in the scientific field have done.”

He also says that Brazil has become a kind of threat on the international market. “Europe, China and the United States are dying to see Brazil make mistakes and we are making mistakes.”

Brazil’s trade balance is basically agricultural commodities, recalls the executive president of the AEB (Brazilian Foreign Trade Association), José Augusto de Castro. “Our manufactured products are not competitively priced, and a decision like this has the power to reduce exports.”

Castro also says that the loss of the European market would further increase the dependence of Brazilian exports on the Chinese market.

In this Wednesday’s trading session, Brent oil also retreated 2.73%, to US$ 80.18% (R$ 440.88), leading Petrobras preferred shares to fall 2.53%. Vale lost 2.01%, following the devaluation of iron ore in the international market.

Despite the weight on this Wednesday’s trading session, the losses of the country’s main producers of goods for export are supporting the story of recent losses on the Stock Exchange.

For Stefany Oliveira, an analyst at Toro Investimentos, the market is now considering more seriously that the country is heading towards a scenario of lack of fiscal control, which could even lead the Ibovespa to fall below 100,000 points.

“The Ibovespa found this minimum region of 103,000 points on October 22nd and, if the breaking of this barrier is consolidated, the downward movements could occur in a more expressive way”, said Oliveira.

The tension involving the country’s fiscal risk persists while there are doubts about the approval in the Senate of the PEC (Proposed Amendment to the Constitution) of the Precatório.

The PEC, which authorizes the president of Jair Bolsonaro (no party) to break the spending ceiling and default on the Union’s judicial debts in 2022, is accepted by the market as a way out for the government to be able to pay the Brazil Aid and, so you can close the next year’s Budget.

Étore Sanchez, chief economist at Ativa Investimentos, draws attention to the fact that Bolsonaro has reaffirmed his intention to readjust the salary of all public servants with the resources opened in the Budget through the approval of the PEC dos Precatório.

“Fiscally not even the PEC of the Precatório is applicable, much less the expansionist intentions of the government, either with the readjustment of civil servants or with the increase of the Bolsa Família”, says Sanchez.

“The president’s signals are very bad in economic terms. First, it shows an absurd lack of budgetary knowledge, but it also brings to the table completely unreasonable pretensions from the perspective of budget constraints,” says the analyst.

The IFI (Independent Fiscal Institution) estimates that each percentage point that the government gives of linear adjustment will cost R$4 billion.

In the United States, the Dow Jones, S&P 500 and Nasdaq indices dropped 0.58%, 0.26% and 0.33%.

Aversion to risky investments has risen on Wall Street amid inflation fears and supply chain concerns inflated by retailers’ profits, with investors betting that the Federal Reserve, the US central bank, will raise interest rates sooner than before. than expected to control the rise in prices.

With Reuters. Lucas Bombana collaborated