Ibovespa closes down 0.62% with balance sheets and steel mills; dollar drops to R$ 4.62

The Ibovespa closed down 0.62%, at 114,343.78 points, this Wednesday (20). Vale and steel companies were the main responsible for the decline in the index, after the mining company released an operational preview and following Usiminas’ quarterly balance sheet. The market also reacted to operational previews from food retailers, the price of iron ore and the Fed’s Beige Book.

The dollar registered a devaluation of 1.03%, quoted at R$ 4,618, the biggest percentage drop since April 4, 2022. In the year, the currency retreated 17.13%.

According to experts interviewed by the CNN Brasil Business, the movement of the currency is due to the entry of international investors in the domestic market looking for fixed income. What draws attention is the rise in future interest rates.

The Central Bank will once again hold an auction of up to 15,000 traditional foreign exchange swap contracts for the purpose of rolling over the expiration date on June 1, 2022. “This move by the BC [que acontece desde 6 de abril]even with the currency at levels below R$ 4.70, it helps to provide liquidity”, says Eduardo Levy, investment director at Kilima Asset

The US spot currency closed the last session up 0.36%, at R$ 4.6667 on sale. While the main B3 index closed down by 0.55%, at 115,056.66 points.

The market expectation is that on Friday the liquidity of the Brazilian stock market would decrease, says Bruno Madruga, partner and head of equity at Monte Bravo Investimentos, due to the holiday on Thursday (21). “Investors will dismantle their positions and wait until next week to make reallocations.”

OK

Vale’s operating data came in below market expectations. The company justified that the lower result is due to heavy rains in the southeast region. The company released its operational preview the day before (19), after the market closed.

THE OK produced 63.9 million tons of iron ore in the first quarter of this year, down 6% compared to the same period in 2021, while the volume of sales of the commodity fell further, the mining company reported on Tuesday, which also reported a high award for your best quality product.

Compared to the last quarter of last year, the OK also reported a drop in production, in the order of 22.5%, according to the data.

THE OK sold 53.6 million tons of iron ore in the first quarter, a volume 9.6% lower than that recorded a year earlier and 35.5% lower than the immediately previous quarter.

Gustavo Cruz, strategist at RB Investimentos, highlights Vale’s weight in the index and says that the Ibovespa is also feeling the effects of the holiday on Thursday, with investors “not wanting to expose themselves so much”.

Usiminas

Usiminas recorded net income of R$ 1.263 billion in the first quarter of 2022, up 5% compared to the same period last year.

In relation to the fourth quarter, there was a decrease of 49%, due to the non-recurring, operational and financial effects, recorded between October and December, as well as the lower operating result recorded in the period.

Adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) was R$ 1.560 billion, a 36% decrease compared to the same period in 2021. In relation to the fourth quarter, a loss of 37% was recorded.

Net revenue was R$ 7.845 billion between January and March, an increase of 11% compared to the same period in 2021. In comparison with the fourth quarter, there was a 3% drop with the reduction in net revenue at the Mining unit , according to data recently released by the company.

Iron ore

Luciano Costa, economist and partner at Monte Bravo Investimentos, in an interview with CNN Brasil Business, explains that China was one of those responsible for the deceleration of the Ibovespa. “The perception that the Asian country is taking new measures to contain Covid-19 and the IMF’s review of China’s growth have reduced iron ore consumption.”

China will also reduce production in crude steel this year, after having already made a cut in 2021, in line with its target in control emissions in carbon, said a spokesperson for China’s state planner, the National in Indevelopment and reform.

electrobras

The minister of the Union Court of Auditors Vital do Rêgo asked for a view of the Eletrobras privatization process in a plenary session this Wednesday, which could compromise the company’s privatization schedule.

According to him, the request for a view will be in the “regulatory form”. The minister said that it would take 60 days to better analyze the case.

According to him, the granting authority “did not calculate” the tariff effect of the process because it claims to have not had sufficient time. Also according to the minister, there is inconsistency in the investments planned for the privatized Eletrobras.

If this deadline is maintained, the government may lose the timing to privatize the company in the first half of the year, before the election period.

There is a concern with the liturgy and rituals of the Court of Auditors. Pressuring a minister to relinquish his prerogative, such as asking for 60-day visas, can cause further embarrassment. The best alternative, according to the CNN, should be to reduce the term to 20 days, which would ensure that capitalization takes place between June and the end of July at the latest.

For members of the government, Eletrobras is today a “unicorn with a golden horn”, and they are pressing to prevent the TCU decision from throwing away the possibility of capitalizing the company with good revenue and attracting investors.

Market analysts agree with the government on the deadline. If it stays for the second half of the year, the increase in interest rates around the world and the October elections could reduce investors’ appetite, even if there is a lot of interest in participating in the operation.

USA

Lucas Xavier, a technical analyst at Warren, says that the Ibovespa also fell throughout the day due to the decline in US stock markets. In the US, the indexes fall due to Netflix’s financial balance.

The Nasdaq index, heavily weighted by tech stocks, fell on Wednesday as streaming giant Netflix tumbled after losing subscribers for the first time in a decade, fueling concerns among investors about its bets on high-growth companies. which will publish results soon.

Netflix Inc tumbled more than 36% and was on its way to its worst day since October 2004. The company blamed inflation, the war in Ukraine and fierce competition for the drop in subscribers and projected greater losses ahead.

beige book

Also abroad, the market was attentive to the Beige Book, which brought more information about the economic conditions that will base the tone of the Federal Reserve (Fed). Most US districts expect inflationary pressure in the country to continue in the coming months.

Contacts also noted that the lockdowns in China have influenced supply chains, with the impact of Covid-19 continuing to be felt. According to the assessment, inflationary pressures have remained strong since the last report.

Demand for labor continued to drive strong US wage growth, the Beige Book also states. According to the material, employment increased at a moderate pace in the country, while demand for workers remained strong among most districts and sectors.

Still, hiring was held back by the general lack of available workers, although several districts reported signs of modest improvement in availability, notes the Beige Book.

Many companies reported significant turnover as employees moved towards higher pay and more flexible working hours, the document says. On the other hand, some contacts indicated that wage pressures started to decelerate.

*With information from Agência Estado, Reuters and Thaís Herédia, from CNN Brasil Business