Ibovespa future stock rises and points to recovery after worst week of the year; DI rate hike awaits Copom

São Paulo – Monday (25th) Ibovespa futures start at their highest and point to a recovery in the Brazilian stock market at the start of the week. The next few days are expected to be busy, with the central bank’s Monetary Policy Committee (Copom) meeting, which should raise interest rates more aggressively, in response to an imminent adjustment in the public spending cap. Balance sheet harvesting begins as well, with Petrobras and Vale’s results coming out early in the season.

Financial market economists have once again raised their expectations for the expanded national consumer price index (IPCA) for 2021, according to the central bank’s focus report, now just released. From 8.69% last week, the median forecast for inflation for this year is now 8.96%. For 2022, the forecast increased from 4.18% to 4.4%.

In terms of GDP, the forecast was lowered from 5.01% to 4.97% in 2021; For 2022, it has decreased from 1.50% to 1.40%. Estimates of the dollar rose from R$5.25 to R$5.45 in 2021, the same as the forecast for 2022.

Base rate forecast, Selic, was 8.25% to 8.75% per annum for 2021; and from 8.75% to 9.5% in 2022.

Investors are still following the fluctuations of the balance sheet ceiling, which stressed the market last week and caused the stock market to plunge 7.28% in five days. Attention is focused on the PEC dos Precatórios, whose text was approved by a special committee of the Chamber of Deputies last week and must now be considered by other members of the Chamber of Deputies.

In addition to reducing the payment of court orders, and the federation’s judicial debts without the right to appeal, the GEC provides room in the budget for expenses with Auxílio Brasil, an alternative to Bolsa Família, which must pay at least R$400 per beneficiary family. The change in question changes the IPCA spending cap correction window, to make room for new spending of R$83 billion in next year’s budget.

Read more: What is the public spending ceiling?

Last Sunday, Economy Minister Paulo Guedes again defended the federal government’s decision to change the spending cap rule, which is the country’s fiscal anchor, to make the aid payment possible until December 2022, the year President Jair Bolsonaro (non-partisan) intends to seek re-election. Along with Bolsonaro, Guedes said it was necessary to “adjust the speed of the financial downturn” to serve the most vulnerable population at the moment, and advocated reforms so that the country was financially resilient.

At 5 p.m., Guedes will take part in the launch of the government’s “Green Growth Program”, and investors will be on the lookout for potential new data on the matter.

The decline of the dollar and the stability of future interest rates in the Coboom week

At 9:04 AM (Brazilian time), Ibovespa futures due in December 2021 were up 0.89% at 107,965 points.

The trading dollar started the day higher and rose 0.27% to R$5.642 when buying and R$5.643 when selling. Dollar futures for November 2021 fell 0.3% to R$5,636.

In the futures market, the DI for January 2023 is up 17 basis points at 11.10%. DI for January 2025 was operating with a seven basis point increase of 11.67%; January 2027 DI registered a 2 basis point increase of 10.88%.

In the midst of a financial downturn scenario, the expectations are there The central bank has accelerated its interest rate hike In Cobum’s decision next Wednesday, economists split between an increase of 1.25 and 1.5 percentage points.

Moderate gains abroad

Abroad, investors are absorbing the latest corporate balance sheets, while Covid-19 is once again a cause for concern in some countries. Prospects for higher global inflation may also cap gains this week, after strong gains in recent days.

On Friday, the Dow recorded its third positive week in a row, advancing 1% and closing at a record high. The S&P advanced 1.7% last week, also in the third positive week in a row, setting a record. In October, the Dow Jones and Standard & Poor’s indices accumulated more than 5%; The Nasdaq rose more than 4.4%.

This morning, stock futures indices point to a bullish open: Dow Jones futures are up 0.04%; S&P futures rose 0.15%. Nasdaq shares rose 0.32%.

Some of the world’s largest technology companies reported earnings this week, including Facebook, Microsoft, Amazon, Apple and Alphabet, which owns Google. A third of Dow components are expected to release quarterly results this week, including Caterpillar, Coca-Cola, Boeing and McDonald’s.

In Europe, the Stoxx 600 index, which aggregates the shares of 600 companies from all major sectors in 17 European countries, remains stable, with positive highlights from mining companies and a negative one from telecom companies.

In Germany, the Ifo Institute Business Climate Index indicated a decline from 98.9 in September to 97.7 in October, indicating growing pessimism among the services, manufacturing and trade sectors due to supply chain problems. Investors are also following inflation data, which in Europe reached a 13-year high in September.

Oil price hike. Brent barrel rose in December 2021 by 1.02% to $86.40. West Texas Intermediate crude for December 2021 rose 1.27% to $84.82 a barrel.

The January contract, the most heavily traded iron ore on the Dalian Commodity Exchange, closed 1.7% higher at CNY688.50 ($107.85) per ton.

Asian bourses saw mixed performance on Monday. Shares of China Evergrande Group, which has been the focus of the news due to its rising indebtedness, reached a 6% increase, but closed down 0.74% in Hong Kong. And according to a report published by the international news agency Reuters, today, Sunday, the company reported that it had acquired more than ten projects.

Also on Sunday, a Reuters report elicited a speech by a Chinese official warning that the Covid outbreak could spread further in the country. This may have hurt market sentiment on Monday. On the other hand, HSBC, which considers China as a primary market, indicated a 74% increase in third-quarter profit, above market expectations.

corporate radar

Hebera (HYPE3)

HYPERA (HYPE3) Recorded net income from continuing operations of R$464.7 million In the third quarter of 2021 (321), a growth of 32.9% compared to the same stage in 2020.

According to data from Refinitiv, analysts expected, on average, a net profit of R$394.5 million for Brazil’s largest pharmaceutical company, but it was not immediately clear whether the numbers were comparable.

In the first nine months of 2021, the company recorded a net income of R$1.25 billion, an increase of 25.6% over the year-over-year comparison.

Meanwhile, earnings before interest, tax, depreciation and amortization (Ebitda), also from continuing operations, increased by approximately 48% to R$580.9 million.

According to Refinitiv, the average market forecast for Ebitda was R$534.9 million.

Hypera, owner of brands such as Coristina D, Addera and Buscopan, had net revenue of R$1.6 billion between July and the end of September.

Valley (VALE3)

VALE3 reported last Friday that it has resumed belt conveyor operations at the Salupo mine, after being paralyzed for 18 days by a fire that partially affected the belt.

According to the company, the cause of the fire has been investigated.

“Processing plant operations will resume today, with copper concentrate production increasing through October 25. Vale estimates the production impact at around 8 kilotons (kilotons), which has already been considered in the production estimate for the fourth quarter, disclosed in its production and sales report for the third quarter. published on October 19,” the company says in a statement to the market.

Eletrobras (ELET3; ELET6)

Eletrobras (ELET3; ELET6) is in the process of selecting the syndicate of banks that will be responsible for structuring the follow-up and distribution of what could be one of the largest stock offerings for a Brazilian company.

In addition, the state-owned company has joined the Stand Still programme, promoted by BNDES, focusing on hydroelectric projects with a capacity of more than 50 MW.

The program was announced by BNDES in September 2021 and is included among the emergency measures available to the market to meet the current water scenario.

tropical (EQTL3)

Equatorial (EQTL3) reported 34.8% growth in energy sales in the third quarter of 2021.

In the first nine months of 2021, electricity sales grew 42%.

Additionally, Equatorial has reported that closing in its subsidiary, CEEE-D, will cost R$144.8 million, within the scope of the Distributor Voluntary Separation Program (PDV).

According to a statement, the program is based on the enrollment of 998 employees.

blue (blue 4)

Azul (AZUL4) has informed of its plans for a strategic partnership with Lilium to build an exclusive network with eVTOL aircraft in the country. A memorandum agreement has been signed providing for the delivery of the subscription bonus representing the right to purchase 1,800,000 “Class A” common shares issued by Lilium from Azul, at a price of €0.12 per share, exercisable until October 22, 2026. Thus, the operator may become a shareholder Indirect in Lilium.

Braskem (BRKM5)

Braskem (BRKM5) announced that total ethylene production in Brazil reached 751.24 thousand tons in the third quarter of 2021, down 8% compared to the same period in 2020.

Production of polypropylene (PP) in the United States increased by 22% in one year and decreased by 3% compared to the previous quarter to 477.04 thousand tons. And in Europe, the advances were 6% in the year and decreased by 3% in the quarter to 145 thousand tons.

The report also highlights that resin sales volume in Brazil decreased by 17% compared to the previous year due to the normalization of resin demand in the Brazilian market and reduced product availability.

Resin exports indicated a 10% decline due to logistical constraints on exports, as well as fewer opportunities in the overseas market.

aliar ([ativo=ALLR3])

Alliar (ALLR3) has informed that it has received from Mam Asset a binding offer to acquire up to 24 million of its shares, at a price of R$19.00 per share.

Shareholders have until November 3 to accept the offer.

In addition, the controlling shareholders will meet until October 27 to discuss approval or rejection of the offer.

alveolar (SQIA3)

SQIA3 Signing a contract to acquire 51% of the share capital of QuiteJá.

The transaction was executed with R$19.1 million in cash and R$19.1 million in equity.

QuiteJá specializes in third party credit recovery.

unite (FIQE3)

Unifique (FIQE3) has signed a contract to allocate rights and assets with fiber-optic internet service provider Click SBS, in the amount of R$ 7.5 million.

(with Reuters and Estadão content)

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