November 29, 2022
Ibovespa Futuro rises in discussions of downsizing move to PEC after severe risk aversion in the market

Ibovespa Futuro rises in discussions of downsizing move to PEC after severe risk aversion in the market

Ibovespa Futuro is running lower in first trades on Friday (18), Extend the losses recorded in the past two sessionsWith concerns about managing fiscal policy in the next government, as well as changes echoing in the transition team.

On a day with a blank domestic calendar, investors remain alert to news on developments in the transitional PEC, which aims to exclude payments with the Bolsa Família and other budget changes from the spending cap rule, as well as speeches by Central Bank President Roberto Campos Neto and Economy Minister Paulo Guedes.

According to information from CNN Brasil, the two presidents of the Senate, Rodrigo Pacheco, and the president of the chamber, Arthur Lira, discussed the night before the prospects for fundamental changes to the PEC, with the possibility of a radical reduction in the financial impact of the PEC, which will go from 198 billion reais Brazilian for about 80 billion Brazilian reals.

In addition, after the criticisms of the transitional presidential election commission presented by the elected government, Vice President-elect Geraldo Alcmene (PSB) said yesterday that there was no reason to “emphasize” and that President-elect Lula’s government would look for ways to reduce costs.

Alckmin indicated the possibility of a “broad review of existing contracts” by the federal government, and also said he sees approval of tax reform as a priority, which should take place “in the shortest possible time” as a key issue for GDP growth.

At 9:13 am (Brasilia time), the December Ibovespa contract was up 1.28%, at 111,360 points.

On Wall Street, US index futures also rose, as investors assessed the course of monetary policy after some stern statements by members of the Federal Reserve (US central bank).

On the eve of this, the speech of the President of the Federal Reserve Bank of St. Louis, James Bullard, who proposed final interest rates in the range of 5% to 7%, higher than determined by the market, gained importance.

This morning, Dow Jones futures were up 0.42%, S&P futures were up 0.59%, and Nasdaq futures were up 0.83%.

dollar

The US currency opened lower on Friday, after the dollar closed another day higher against the riyal the previous day, reflecting the market’s satisfaction with the country’s fiscal framework, after news that Congress is negotiating extrapolation of a ceiling for lower expenditures.

The trading dollar is running lower by 0.63%, quoted at R$5.367 for purchases and R$5.368 for sales. Already, December dollar futures are down 1.33%, to R$5.372.

In the interest rate market, futures contracts are completely down. DIF23 (January to 2023) runs as low as 0.02 dpi, at 13.68%; DIF25, -0.16 pg, to 13.24%; DIF27, -0.17 pg, to 12.96%; and DIF29, -0.15 pg, to 12.98%.

the outside

European markets ran higher on Friday, as investors calibrated their bets on the pace of monetary tightening in the world’s major economies.

European Central Bank President Christine Lagarde said the institution will continue to raise interest rates and may even need to restrict economic activity to control inflation, highlighting monetary policy as the bank’s main tool to reduce the balance sheet.

Inflation in the region is 10.6%, well above the ECB’s 2% target, and even a recession, now almost certain in the winter months, is unlikely to ease price pressures enough to allow the institution to step on the brakes.

Market participants are ripping between prices at 50 and 75 basis points in December.

Asia

Most Asian stocks closed lower after Japan’s consumer price index for October rose 3.6% year-on-year, better-than-expected and at the highest pace in 40 years. Refinitiv data showed that the country last saw the same level in February 1982.

Meanwhile, economic leaders from the region will meet again in Thailand at the Asia-Pacific Economic Cooperation Summit.

On the commodities side, iron ore prices rose on the Dalian Stock Exchange for the sixth consecutive session, continuing the strong recovery recorded after the heavy sell-off in October, driven by optimism that the recent political measures in China will increase demand for steel and its ore. Materials, despite market skepticism that commodities will continue to rise.

Oil prices are running slightly higher as the dollar weakens, but are heading for weekly losses on expectations that there will be no pause in rising interest rates in the US and the possibility of weak demand from the main oil importer, China, amid rising Covid-19 cases.

Iron ore prices rose on the Dalian stock exchange for the sixth session in a row, continuing the strong recovery recorded after the sell-off in October, driven by optimism that the recent political measures in China will increase demand for steel and raw materials, although there is still a strong demand for steel and raw materials. Market doubts about Commodities continue to rise.