From 130,000 to 105,000 points: understand how fiscal risk affects mood in the market

Concerns about fiscal risk continue to shake the Brazilian stock exchange, where the market follows with many reservations the impasse of the PEC dos Precatórios.

The Ibovespa, the main index of the São Paulo stock exchange, operates on a falling day, after ending Wednesday at the lowest level in more than a year.

The stock exchange lost its level of 130,000 points with the announcement of the government’s intention to pay legal debts in installments – which was seen by many as a “default”, then lost its level of 115,000 with the announcement that they would break the spending ceiling .

Now, it is losing the level of 105,000 due to the increase in current uncertainty, which leads to fear of a worse solution for the market.

At the center of the chessboard is the proposal for installment payment of judicially recognized debts of the Union, which makes room, among other things, for the payment of Brazil Aid.

In addition to temporarily financing the social program, the government has already indicated that it wants to offer a benefit to truck drivers with these resources and even readjust the salaries of employees. Concrete, however, the plan still has nothing.

In this scenario of uncertain plans, the market’s view is that the government is having difficulties in political articulation to approve its projects, which greatly increases the uncertainties for investments. Therefore, the risk that investors see today is “anything goes”, explains the economics analyst at CNN Priscilla Yazbek.

In addition, what has been giving a negative tone to assets in Brazil over the past six months, according to experienced financial market analyst Roberto Attuch Jr., is the reading that the government’s fiscal policy priority has been to reelect President Jair Bolsonaro .