O dollar closed with an expressive high against the real on Tuesday (16) after strong data from the United States and concerns about national fiscal policy, reversing the morning’s drop. Meanwhile, the Ibovespa retreated, reflecting a profit-taking movement after a two-week rally, with Vale among the biggest negative pressures in the wake of falling iron ore futures, as were several stocks in retailers.
The dollar closed the day with a high of 0.79%, to R$ 5.4999. The Ibovespa fell 1.82% to 104,403 points.
The trading session was also marked by adjustments in the movement of ADRs (receipts of shares traded in the USA) Brazilians the day before, when there was no trading on the São Paulo stock exchange due to the holiday in Brazil.
On Friday (12), the Ibovespa fell by more than 1%, but hit the second week in a row and increased its appreciation in November to 2.7%, which opened up space for some profit taking.
This Tuesday, investors analyzed the IBC-Br, considered a preview of the START (Gross Domestic Product), which showed contraction of Brazilian economic activity in September for the second month in a row, indicating a chance of technical recession.
In yet another unfavorable data on the country’s economy, sales in the retail calculated by Cielo’s ICVA, retreated 0.8% in October year on year, discounted for inflation, interrupting a sequence of 6 months of growth. As a result, retailers such as Magazine Luiza, Americanas and Via were among the biggest casualties of the day. Magalu had the biggest drop of the day, 12.65%.
The market did not react well to the president’s statements Jair Bolsonaro that the approval of the Proposed Amendment to the Constitution (PEC) of the Precatório by Congress will make room for the readjustment granting to federal civil servants, justifying the possible increase as a response to a wage freeze and inflation.
The day before, Bolsonaro had already said that the slack in the spending ceiling to be created by PEC of Precatório could be used to readjust federal employees, in addition to its main purpose, which is to finance the new Auxílio Brasil cash transfer program.
The comments endorse investor fears about an even more expansionary fiscal policy by the government, whose pressure for Brazil Aid imposed defeat on the economics minister’s narrative of fiscal austerity, Paulo Guedes, and caused a strong deterioration in domestic assets throughout October amid fears of uncontrolled public accounts.
Fund managers consulted by Bank of America started to see the fiscal deterioration as the biggest risk to the Brazilian economy, according to a survey this month of November. In October, the post was occupied by the 2022 elections.
A swing season of Brazilian companies, in turn, is heading towards the end, with the numbers of Eletrobras and Méliuz expected for after the close of trading on Tuesday.
Technical analysis by the Itaú BBA team highlighted that, despite the recent improvement, the Ibovespa will only confirm a new upward trend when it exceeds 114,500 points.
Abroad, the US stock exchanges opened with discreet fluctuations, against the backdrop of positive prospects for Walmart and the above-expected growth in retail sales in the country, but a jump in imported prices. They went up throughout the day, closing on a high.
Data from the US Department of Commerce showed that US retail sales rose 1.7% in October. Economists polled by Reuters had expected a 1.4% increase.
Reference: CNN Brasil
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