Ibovespa ends up falling with PEC for court-ordered debts and future interest rates; dollar falls

The session this Monday (22) ended in a fall for both the Ibovespa and the dollar. The main Brazilian index closed with a devaluation of 0.89%, at 102,122.37 points, and the US currency retreated 0.29%, and ended up quoted at R$ 5.594.

The main Brazilian index was in the red, reflecting investors’ concern about the definition of the PEC dos Precatórios, “in addition to the financial and real estate assets that generally retreated throughout the day”, says Bruno Madruga, Head of Equities at Monte Bravo Investimentos .

Madruga explains that future interest rates appreciated, which pulls the real estate market down. The IMOB closed down 2.86% to 711.95 points.

Interest due in 2023 was up 2.45%; for 2021, at 0.51%.

At the same time, the Focus Report also released an IPCA (Broad National Consumer Price Index) above market expectations.

The weekly survey shows that this year’s inflation forecast rose for the thirty-third time in a row, going from double digits, to 10.12%. It has also been adjusted for the year 2022 to close to 5%.

Historical

During the morning, the main Brazilian index rose influenced by the soaring of metallic commodities, mainly iron ore, which grew 6.2% in Dalian, China. At 5:57 pm, the commodity cost US$ 92.78, with a slight increase of 0.84%.

The good performance boosted Vale (VALE3) as the protagonist of the biggest high of today’s session; alongside Usiminas (USIM5) and Gerdau (GGBR4).

Earlier, at the best time, the Ibovespa rose to 104,613.07 points. The financial volume was R$ 17.8 billion.

PEC of court orders

The proposal makes room in the budget for the payment, among other things, of Auxílio Brasil, it is not preferred by the market, but it brings some definition to an uncertain scenario for public accounts.

Senator Fernando Bezerra, rapporteur of the PEC dos Precatórios, must present his opinion on Wednesday (24) at the Committee on Constitution and Justice (CCJ). The expectation is that the vote takes place in the next few days and the PEC goes to plenary next week. The Arko Advice consultancy points out a trend of approval of the PEC dos Precatórios until the first week of December.

Dollar

The US currency moved away from the lows of the session after the reappointment of Jerome Powell as chairman of the Fed (Federal Reserve, Central Bank of the United States).

Powell is considered more “hawkish” (position less inclined to maintain stimulating monetary conditions) than Brainard, the other main option considered for the chair post. His retention at the helm of the Fed has market participants anticipating expectations for interest rate hikes in the US, which is widely seen as positive for the dollar.

The North American currency traded on the interbank market comes from a sequence of five daily appreciations against the real, a period in which it accumulated an increase of 3.84%. The dollar closed the session on Friday (19) at R$ 5.610 on sale.

According to Alexandre Netto, head of exchange at Acqua-Vero Investimentos, this helps to explain the real’s recovery in this trading session, since it is normal for there to be adjustments in the currency’s price after expressive movements in the exchange rate.

Rodrigo Franchini, a partner at Monte Bravo Investimento, also points out that “keeping Powell in office ensures that fiscal levels will be maintained, and good signs abroad make emerging markets, such as Brazil, receive foreign capital flows.” The more American money, the more favorable the tendency for the dollar to fall.

Week’s agenda

This Monday, several specialists also called attention to the week’s agenda, which includes the release of inflation data from the United States and the publication of the minutes of the last Federal Reserve meeting.

Bradesco explained in a report that the document “may bring more details about the Fed’s plans in relation to the pace of reduction of the asset purchase program (tapering)”.

There is a perception among investors that cuts in this stimulus by the US central bank will precede interest rate hikes in the world’s largest economy.

If the Fed accelerates the pace of reducing its bond purchases and raises borrowing costs sooner than expected, the dollar could be boosted globally as this would increase the yield on US sovereigns.

Rooms are descending from B3

See below which were the companies with the highest appreciation and the lowest income on this Monday (22nd) trading session:

biggest highs

• Vale (VALE3) + 5.56%
• Bradespar (BRAP4) +4.46%
• Usiminas (USIM5) +2.94%
• Gerdau (GGBR4) +2.58%
• Gerdau (GOAU4) +2.13%

biggest casualties

• Banco Inter (BIDI11) -13.53%
• Banco Inter (BIDI4) -12.65%
• Locaweb (LWSA3) -9.24%
• Meliuz (CASH3) – 7.56%
• Lojas Americanas (LAME4) -6.79%