Brazilian stock exchange experiences biggest drop since March (May 4)

RIO DE JANEIRO, BRAZIL – On a volatile day in the financial market, the Brazilian stock market experienced its largest drop since mid-March. The dollar opened the day high, but cooled down over the afternoon until it closed with a slight appreciation.

The IBOVESPA index, from B3, closed Tuesday, May 4th, at 117,712 points, with a 1.26% drop. The indicator traded low for most of the session, but the drop intensified in the afternoon, influenced by bank shares and by external markets. This was the IBOVESPA’s largest drop for one day since March 23rd.

The commercial dollar closed the session sold at R$5.431, up R$0.012 (+0.22%). At the day’s peak, around 9:20 AM, the price reached R$5.48, but the entry of external flows during the afternoon eased the pressures on the exchange rate.

On Tuesday, international markets had a tense day, after the U.S. Treasury Secretary Janet Yellen commented on the performance of the planet’s largest economy, which is recovering at a better pace than expected. The statement raised the U.S. Treasury bonds performance, pressuring the dollar quotation in emerging countries, such as Brazil.

The pressure on the exchange rate was not bigger due to the inflow of foreign currency resulting from the appreciation of commodities (primary goods with international quotation). Higher prices boost exports, increasing the inflow of dollars to the country.

The market is also waiting for tomorrow’s meeting of the Central Bank’s Monetary Policy Committee (COPOM). Financial institutions project that the SELIC rate (the economy’s basic interest rate) will rise to 3.5% per year.

Source: Agência Brasil