Ibovespa operates lower with US interest rates on the radar; dollar round stability

O Ibovespa fell 0.27%, quoted at 110,507 points, around 10:15 am this Wednesday (14), maintaining the downward movement the day before after the market reacted negatively to a data of inflation in the United States . The retreat is limited by a positive performance of oil stocks, which accompany the appreciation of the commodity.

At the same time, the dollar retreated 0.03%, at R$ 5.185, hovering around stability. The currency has adjusted slightly after strong gains, linked to an increase in risk aversion among investors who monitor the US interest rate hike cycle.

The Consumer Price Index (CPI) for August slowed down in the 12-month period to 8.3% but had a positive monthly variation of 0.1%, while the core rose.

The data frustrated the market, which was projecting deflation of 0.1% in the monthly comparison, and now it started to expect a monetary policy from the Federal Reserve more aggressive.

A 0.75 percentage point rise in interest rates in September is still the majority opinion of the market, but the CPI has opened the door to bets on an even higher rise, of 1 pp. In addition, it has led to bets on a tougher cycle, with higher higher in November and December.

In this trading session, the Central Bank will auction up to 15 thousand traditional foreign exchange swap contracts for the purpose of rolling over the maturity date of October 3, 2022.

On Tuesday (13), the dollar rose 1.80% to R$5.19. The Ibovespa, on the other hand, fell by 2.3%, to 110,793.96 points.

overall feeling

Investors’ global risk aversion, triggered by fears about a possible generalized economic slowdown due to a series of interest rate hikes around the world to contain record levels of inflation, has varied in intensity depending on expectations about the cycle of interest rate hikes in United States .

The process of raising the US rate continued in July with a new increase of 0.75 percentage point. However, the Federal Reserve signaled that it could make smaller increases as the country’s economy already shows signs of deceleration, seeking to avoid a recession.

Higher interest rates in the United States attract investments for the country’s fixed income due to its high security and favor the dollar, but harm markets and stock exchanges around the world, including the North American ones.

Investors also monitor the state of the economy in China , which also shows signs of a slowdown linked to a series of lockdowns in relevant cities. The expectation is that the Chinese government will intensify an effort to stimulate the economy, while facing difficulties to reverse a situation of low consumption by the population, which impacts the country’s demand for commodities.

Even so, the Ibovespa and the real found room for recovery with an improvement in the mood of the market, supported by the positive outlook for commodities, a stronger domestic economic scenario and a reduction in the perception of risks in relation to the elections. The scenario, however, may change depending on the degree of risk aversion abroad.

*With information from Reuters