SAO PAULO – The last trading session of the month witnessed what Ibovespa Over the course of November: volatility. The benchmark benchmark for the Brazilian stock market has tested a serious limit, losing nearly 100,000 points, according to charting analysts. “If we lose 100 thousand points, we go to 94 thousand, then December is negative. With 100 thousand held, we will have room to go back to 108 thousand and then to 110 thousand,” explains Fabricio Gonçalves, CEO of Box Asset Management.
But the stock market had plenty of reasons for extreme volatility. The day already started with new concerns about the omicron variant of Covid-19. Today, at the end of the day, Anfisa confirmed The first cases of the strain in Brazil. Although the first studies show the effectiveness of vaccines against the new strain, there is still a lot of uncertainty about the new alternative. “The market is not 100% comfortable. There is still little data on the new alternative and there is a lot of speculation, which is all investors hate,” says Flávio Aragão, partner at 051 Capital.
November was the fifth consecutive month of decline in the Ibovespa Index. As for Aragon, the Brazilian stock market lost chances of recovery before it coexisted with foreign stock exchanges. “We stopped surfing with the global market, in those high weeks, mainly because of Brasilia,” says Aragao.
Many analysts have heard of InfomoneyThe main drag on Ibovespa’s growth in the month was political and financial risks. “Right now, the main problems facing the Brazilian stock market are local. The focus is on the PEC for the preliminary process that will determine how the R$400 aid will be financed. The concern is not only where the resource will come from, but How far can spending go?
The PEC dos Precatórios was approved today by the Senate Committee on Constitution and Justice (CCJ). Just before the start of the parliamentary recess, the text still needs to be approved in plenary, where a minimum support of 49 of the 81 senators is necessary in two rounds of voting. “The market will be even more stressed if the PEC is not approved,” says Gonçalves, from Box Asset Management.
The Ibovespa index was at its lowest level today after US central bank spokesmen indicated that the country’s stimulus measures could be withdrawn sooner than previously thought. Federal Reserve Chairman Jerome Powell admitted that the omicron variable can reduce people’s desire to work in person, slowing progress in the labor market and intensifying supply chain disruptions.
But even so, it took more than that extremist, saying the Fed could end the injection of liquidity into the economy earlier than planned.
Gustavo Cruz, strategist at RB Investimentos, says the market has worsened due to diminishing It is also expected to lead to higher interest rates in the US.
“A lot of what should have fallen on Ibovespa regarding interest rates in Brazil has already fallen. But when a new fact emerges, a negative one, there is room for further declines, such as the omicron variable and the expectation that US rates will be raised earlier than it is Expected,” says Gustavo Cruz, strategist at RB Investimentos.
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US interest rates are currently close to zero. A rate hike may increase the profitability and attractiveness of US Treasury bonds, which are considered the safest in the world. This would take capital from risky investments and above all from emerging countries such as Brazil.
The Ibovespa index may have closed off its lowest level today, but ended the session with the worst closing result since last July. The index fell 0.87% to 101,015 points. The financial turnover was 43.1 billion R$, higher than the average. In the month, the Ibovespa Index fell 1.52%.
With the arrival of December, investors are beginning to wonder if there will be a famous “year-end rally”, which usually occurs in the last quarter, but has yet to materialize. For Riccardo Olebone, partner at Axia Investing, there is a 110,000-point barrier that the exchange will struggle to overcome, which, he says, is a reflection of the weak economy.
“There was room for recovery in our market, but considering that we are going into the last month of the year, it will be difficult for us to break that barrier,” Oliboni says.
The commercial dollar closed the day 0.46% higher at R$ 5.635 for purchases and R$ 5.636 for sales. Despite the upward movement in recent days, the US currency accumulated a slight decrease of 0.19% in November.
The PEC of Precatórios in the CCJ and the new variant of Covid have reinforced the perception of an inflationary slowdown. In the interest rate futures market, the DI for January 2023 fell by ten basis points to 11.78%; January 2025 DI down 19 basis points to 11.40%; The DI for January 2027 fell 24 basis points to 11.31%.
In the US, stock exchanges closed sharply lower with doubts about the omicron variable and the perspective of cut stimulus and interest rates. The Dow closed 1.86% lower at 34,483 points. The S&P fell 1.9% to 4,566 points. The Nasdaq fell 1.55% to 15,537 points.
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In Europe, the Stoxx 600 Index, which aggregates shares of 600 companies from all major sectors in 17 European countries, closed 1.13% lower.
In the commodities sector, which is important to the performance of the Brazilian Stock Exchange, oil prices closed at their lowest levels since August. Brent fell 5.34% to $69.31, and WTI was $66.25, declining by 5.29%.
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