Brazil’s Ibovespa rises 1.85% with less political tension and positive external scenario

RIO DE JANEIRO, BRAZIL – The Ibovespa index closed the trading session on September 13 up 1.85%, at 116,404 points. The movement occurs amid the positive tone of the international market and the relief of tension in Brasilia after a week of political turbulence.

The dollar followed its devaluation against other currencies in the foreign exchange market and fell 0.84% to 5.224 reais.

Even with the prospect of a turbulent scenario until next year’s elections, the market’s perception was that the political scene is a little calmer this early in the week, which helps the stock market regain traction.

“The protests against Bolsonaro were of low adherence, and the president did not get into new controversies this weekend. This can be seen as positive since the market expects an advance of the political agenda in Brasilia,” said Jerson Zanlorenzi, head of equities and derivatives desk at BTG Pactual digital.

The administrative reform should be on the agenda this week, but focus will be the vote on the PEC of the installment payment of precatórios [court-ordered federal debts]: the big question is whether the proposal will be kept within or outside the constitutional spending cap – the main fiscal anchor of the country.

According to Bloomberg, the government wants to negotiate with Congress a change in the text of the PEC of precatórios to solve the impasse in the 2022 budget. The change would establish a ceiling for spending on precatórios.

The issue of the 2022 budget becomes more urgent in the face of advancing inflation, which puts pressure on government accounts. According to the Focus Report released this morning, market expectations for inflation presented a new high for 2021 and 2022.

For this year, the median of the projections rose from 7.58% to 8%. For 2022, the estimates have broken the 4% level.

In the United States, where inflation has also been beating market estimates, the Dow Jones index closed up 0.76%, while the S&P 500 rose 0.24%. The Nasdaq index fell 0.07% amid caution ahead of the US consumer price index (CPI) release Tuesday.

With greater participation of technology companies, the index is usually more favored by monetary stimulus. With the beginning of the withdrawal of stimulus via asset purchases, the tapering, by the Federal Reserve, a higher than expected inflation may cause the correction movement to be more intense.

HIGHLIGHTS

In a session marked by strong highs, the share of Méliuz (CASH3) extended its appreciation for the third straight trading session, soaring 12.8% and closing at the top of Ibovespa. After falling more than 50% in just over a month, the paper began to rehearse a recovery before analysts’ assessment that it became cheap.

On Monday, the vice-leading highs of the index were the shares of Banco Pan (BPAN4), which rose 9.45% after announcing the acquisition of a majority stake in Mobiauto, the largest digital platform for buying and selling independent vehicles in the country.

Still, on the positive side, CVC (CVCB3), Yduqs (YDUQ3), Inter (BIDI4), and Lojas Americanas closed with highs of 9.30%, 8%, 7.37%, and 7.27%, respectively.

Among the shares with the largest participation in Ibovespa, Petrobras shares (PETR3/PETR4) were among those responsible for today’s high, advancing more than 3%.

The strong appreciation of the state-owned company comes after the demobilization of the truckers’ strike, with the 1% rise in Brent crude oil prices as a backdrop. In the same sector, PetroRio (PRIO3) rose 2%.

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