Investors Return from Holiday with Eye on Oil Price Shock
RIO DE JANEIRO, BRAZIL – After Tuesday’s holiday, the Brazilian stock market should experience an intense day today, mainly reflecting the oil prices in the international market. A sharp drop in oil prices drove the US S&P 500 index down by three percent on Tuesday – with the New York-based ADRs index of Brazilian companies down 3.3 percent. On Monday, the IBOVESPA had dropped 0.02 percent to 78,902 points.
The WTI oil futures contracts plummeted 300 percent on Monday to an unprecedented negative -US$37.63 (R$188) a barrel. Yesterday, the May contracts closed the day at US$10.01. Brent Oil, in turn, kicks off this Wednesday at its lowest price in two decades, trading at US$17.8, down eight percent from yesterday’s figure.
The sharp drops are related to a convergence of factors, including the tug-of-war between Russia and Saudi Arabia to offer cheap oil and remove US industry’s firepower. But the main factor is the increasing downward estimates in consumption, due to the economic crisis generated by the coronavirus.
There is a lack of storage capacity for oil, to the point where the cost of storage and delivery may exceed the product’s value – hence the negative figure for future contracts. The borderline situation occurs because cutting production from fields in operation is a process that could damage future extraction capacity. The situation has led to a string of memes in investor groups, showing people poorer after finding an oil well in their backyard.
Tuesday’s sharp drop in international stocks should lead to bullish trading at the opening in the US today. The Dow and S&P 500 futures indices were up over 200 points at 7 AM in Brasília. The Asian MSCI rose 0.4 percent, and in Europe the FTSE 100 and DAX were up 1.5 percent at 7 AM in Brasília. A new US$480 billion stimulus package passed in the US Senate yesterday helped boost the index. The dispute between the crisis and the stimulus will continue to set the tone for trading in the coming weeks.
Source: Exame
Live Market IntelligenceBrazil — Live Market Board
Rio Times · Live Market Intelligence
Brazil — Live Market Board
-0.10%
166,934.20
-0.10%
64,397.45
-0.66%
11,042.67
+0.39%
2,947,349
-1.77%
2,452.46
+0.84%
58,104.31
+0.40%
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 166,934.20 | -0.10% | +21.85% | 167,100.95 | 168,310 | 167,142 | — |
| USD/BRL | 5.16 | +0.01% | -5.13% | 5.16 | 5.18 | 5.14 | — |
| SELIC | 14.00% | — | — | — | — | — | |
| PETR4 | 41.64 | -0.05% | +35.19% | 41.66 | 41.97 | 41.15 | 41,499,400 |
| VALE3 | 72.97 | +0.83% | +30.75% | 72.37 | 73.54 | 72.66 | 17,658,000 |
| ITUB4 | 38.60 | -1.03% | +4.57% | 39.00 | 39.34 | 38.39 | 29,487,800 |
| BBDC4 | 16.85 | +0.36% | +3.50% | 16.79 | 16.90 | 16.67 | 19,416,900 |
| BBAS3 | 19.37 | +0.47% | +0.73% | 19.28 | 19.44 | 19.16 | 11,069,200 |
| B3SA3 | 14.26 | -0.21% | +12.73% | 14.29 | 14.47 | 14.11 | 33,037,800 |
| ABEV3 | 14.89 | -0.80% | +21.91% | 15.01 | 15.07 | 14.81 | 16,453,100 |
| WEGE3 | 47.59 | +0.49% | +29.99% | 47.36 | 48.08 | 47.36 | 3,364,600 |
| PRIO3 | 59.14 | -0.19% | +50.67% | 59.25 | 59.81 | 58.74 | 3,325,600 |
| SUZB3 | 41.33 | +2.35% | -23.55% | 40.38 | 41.48 | 40.35 | 3,914,900 |
| RENT3 | 34.68 | -0.09% | +0.84% | 34.71 | 34.96 | 34.35 | 7,979,100 |
| AZZA3 | 15.89 | -2.63% | -53.76% | 16.32 | 16.42 | 15.82 | 1,330,300 |
| CSNA3 | 4.30 | +0.47% | -42.65% | 4.28 | 4.41 | 4.26 | 10,076,100 |
| GGBR4 | 24.69 | +2.19% | +51.38% | 24.16 | 24.85 | 24.18 | 7,047,600 |
| ENEV3 | 24.21 | -1.38% | +70.49% | 24.55 | 24.64 | 23.99 | 9,297,000 |
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