Ibovespa closes steady, under pressure from commodities; the dollar climbs 1.3%, quoted at R$5.65, with fiscal issues on the horizon.
Tuesday, the 15th, saw the dollar rise more than 1% in Brazil and once again break through the R$5.60 barrier due to the sharp decline in commodities like oil and iron ore abroad. The local market also once again expressed skepticism about the government’s ability to balance public finances.
At R$5.6587, the spot dollar ended the day up 1.36%. The value of the currency has increased by 3.85% in October.
The B3 first-maturity dollar futures contract increased 1.16% to R$5.6620 for sale at 5:30 p.m.
Although the increase in Itaú and WEG shares prevented a larger decrease, the Ibovespa closed lower on Tuesday due to pressure from declining commodity prices, which had a negative impact on the performance of Vale and Petrobras shares.
The Ibovespa, the benchmark index for the Brazilian stock market, closed at 131,043.27 points, up 0.03% from its lowest position of 130,199.82 points and its highest point of 131,456.51 points during the day. R$20.22 billion was the total amount of money. Today’s dollar
When Reuters reported that the government is considering steps to control required spending, which will be announced during the second round of municipal elections at the end of this month, the dollar depreciated against the real and the rest of the world on Monday.
At the start of Tuesday’s session, the US currency fluctuated around stability, but the decline in foreign commodity prices swiftly accelerated its advances.
In the case of oil, barrel prices dropped by more than 4% as concerns about potential Iranian supply restrictions subsided. Conversely, the Asian giant’s recent dismal economic data and the possibility of a decline in the demand for steel from China had an effect on iron ore.
Both goods are crucial to Brazil’s export strategy.
On the afternoon, Thiago Avallone, a foreign exchange specialist at Manchester Investimentos, said, “The falling commodities are pulling the dollar down a lot, because exporting countries are being penalized, like Brazil,” explaining the US currency’s sharp rise against the real.
Shortly after opening, at 9:07 a.m., the dollar fell to R$5.5837 (+0.02%), and at 1:50 p.m., it surged to R$5.6664 (+1.50%).
Prices were once again supported by market uncertainty over Brazil’s fiscal balance, which was also evident in the DI (Interbank Deposits) market this Tuesday, in addition to international markets, Avallone said.
In the late afternoon, the dollar continued to appreciate vs the majority of foreign currencies, including peers of the real, including the Mexican and Chilean pesos. The dollar index, which compares the performance of the US dollar to a basket of six other currencies, increased 0.07% to 103.250 at 5:27 p.m.
All 14,000 conventional foreign exchange swap contracts that were put up for auction to roll over the December 2, 2024, maturity date were sold by the Central Bank during this session.
The day of the Ibovespa
Bruna Sene, a variable income analyst from Rico, claims that the Ibovespa was able to stay profitable because of the anticipation of Brazil’s third-quarter corporate earnings season next week as well as the “positive mood” that persisted the day before due to reports of government expenditure cuts.
The earnings season should be “slightly positive,” according to a report.
Itaú BBA analysts lead by Daniel Gewehr said, “We should see a softer growth in revenue and EBITDA, but an acceleration in net income compared to the previous quarter.”
Although some people view the situation as “glass half empty,” the Ibovespa was able to maintain its position at the 130,000-point level, which is regarded as a support area.
“These 130,000 points ought to be helpful. Enrico Cozzolino, partner and head of analysis at Levante Investimentos, referred to the cumulative fluctuation of Ibovespa shares since the index’s record height, saying, “But when we look at the recent high of the Ibovespa, on August 28, only 15 assets have been positive since then.”
“We haven’t seen any definitions or structural changes on the local political scene, even though we heard yesterday that the government is looking into plans to cut spending,” he continued.
As the world’s largest economy enters its earnings season, market indices in the US closed down, with the SPX down 0.76%. The 10-year Treasury yield increased from 4.0730% the previous day to 4.0356% at the conclusion of the afternoon in the interest market.
Highlights
In tandem with the decline in iron ore futures on the Dalian exchange, which saw a January contract close down 0.38% at 791.5 yuan ($111.26) per ton, VALE ON saw a 1.23% decline. After the market closes on Tuesday, Vale releases its third-quarter sales and production figures.
Following a steep drop in oil prices on the global market, where a barrel of Brent closed down 4.14% at $74.25, PETROBRAS PN lost 0.82% and PETROBRAS ON fell 1.14%. PRIO ON, BRAVA ENERGIA ON, and PETRORECÔNCAVO ON all had declines of 0.3%, 0.46%, and 2.07%, respectively, in the sector.
WEG ON saw the biggest contribution to the Ibovespa, rising 2.71% to an all-time high of 56.53 reais. On October 30, the electric motor manufacturer releases its third-quarter earnings.
ALSO READ:
Representatives Request That FG Finish The Buffer Dam in Adamawa.
