Ibovespa takes off abroad and rises with commodities; dollar declines with favorable flow

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O dollar fell 0.34%, quoted at R$5,202, around 12:15 pm this Friday (5), reversing the high in the morning while the Brazilian market benefits from a favorable flow of investments, despite the Payroll report on job creation of work in United States having released figures above expectations, influencing bets on the country’s interest rates.

At the same time, the Ibovespa it advanced 0.62%, to 106,551 points, detached from the foreign exchanges, which retreat after the data on the North American economy. The index is driven by stocks linked to commodities in particular Vale and Petrobras, which operate on the upswing with optimism about demand prospects in China and the United States.

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The international market reacted negatively to employment data from the US economy, which exceeded expectations and suggest that the country’s economy is not yet in recession. The unemployment rate dropped to 3.5%, and 528,000 jobs were created, more than double the forecast.

The numbers reinforce the view that the country’s economy is overheated, which increases demand and pushes inflation up. Thus, the market’s view is that the Federal Reserve would need to be more aggressive in the rate hike cycle, with bets of a third 0.75 percentage point increase gaining traction again.

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The table indicates a reversal of forecasts in previous weeks, when the market bet on a milder cycle, with lower interest rate hikes, after the Gross Domestic Product (GDP ) of second quarter retreat and the Fed indicates that it could have lower elevations depending on economic data .

The US currency is benefited abroad by rising interest rates, and the greater the bets on a more aggressive Fed, the greater the withdrawal of investments from other markets, which migrate to the United States, also driven by fears about a recession in the country.

During the week, the real and the Ibovespa benefited from signals from the Monetary Policy Committee (Copom ) that the cycle of high interest rates in Brazil may have ended in August, but leaving open a possible increase in September depending on the conjuncture. With the Selic rate following market projections, reactions among investors were positive.

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 September 1, 2022.

On Thursday (4), the dollar fell by 1.05%, quoted at R$ 5.222. The Ibovespa, on the other hand, advanced 2.04%, to 105,892.22 points, its highest level since June 9.

overall feeling

Strong global risk aversion by investors, triggered by fears about a possible widespread economic slowdown due to a series of interest rate hikes around the world to contain record levels of inflation, has eased in recent days, reflecting expectations of a cycle of interest rate hikes. less aggressive in the 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 has signaled that it may make smaller hikes as the country’s economy already shows signs of slowing, seeking to avoid a recession.

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

Investors also monitor the state of the economy of China , which also shows signs of a slowdown linked to a series of lockdowns in relevant cities. The Chinese government is expected to intensify an effort to stimulate the economy, which should help maintain high demand for commodities.

In the domestic scenario, the Benefits PEC which creates or expands social benefits with an estimated cost of R$ 41 billion, was poorly received by the market, as it reinforces the fiscal risk by bringing new spending above the ceiling.

The Ibovespa and the real were harmed by the scenario, but an apparent greater optimism in the market allows for a recovery, even if far from the levels of the first quarter of 2022, when they were benefited by the international scenario.

Test your knowledge about the Ibovespa

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What types of assets are eligible to be listed on the Ibovespa?

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*With information from Reuters

Source: CNN Brasil

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