RIO DE JANEIRO, BRAZIL – Ibovespa partially recovered from last Friday’s losses on Monday, while investors await new information about the Omicron variant of the Covid-19 virus. The Brazilian stock market was in line with foreign markets, where indexes also rose, although there are many doubts about the new strain.
Ibovespa closed up 0.58% at 102,817 points. Trading volume for the day reached R$24.4 (US$4.4) billion. Ibovespa futures for December 2021 rose 0.89% in the after market at 103.250 points.
Several countries are partially closing their borders while it is unclear whether or not the mutation is resistant to existing vaccines.
However, yesterday’s trend was perceived more as an adjustment than a relief in itself. “Concern about the new variant has not passed. It is a natural correction of the market, which has much of this: we had a strong drop on Friday, so it is a correction of this downward movement,” explains Ivest Consultoria investment specialist Juan Espinhel.
The main concern now is the possibility of new lockdowns, which could be adopted if the existing vaccines are ineffective against the new strain.
“Health protocols are already in place, what we need to understand is how much new lockdowns are going to cost the Central Banks. Will they be able to maintain the current levels of stimulus? Are they going to be able to keep the economy afloat and tackle inflation?” Espinhel asks.
Meanwhile, inflation projections in Brazil continue to worsen. Economists in the financial market once again raised their projections for the Extended National Consumer Price Index (IPCA) for 2021, the Central Bank’s Focus Report revealed. From 10.12% last week, the median expectation for inflation this year now stands at 10.15%. For 2022 the forecast rose from 4.96% to 5%.
“As expected, the median of the economists’ projections in the Focus Report for the IPCA in 2022 hit the target ceiling at 5%. It was nothing new, after all it is now a consensus in the market that there will be widespread pressures on the index next year,” says Necton chief economist André Perfeito.
The Court-ordered federal debt PEC is scheduled for vote Tuesday (30), at 9 AM, in the Senate’s Constitution and Justice Committee (CCJ). According to Senate president Rodrigo Pacheco, once approved, it will “immediately” be forwarded to the House in order to be voted on Thursday.
However, the date is a delay from President Jair Bolsonaro’s government’s initial expectation, which was to complete the vote in the Senate today. In addition, the government is still seeking votes to consolidate the required 49 votes in favor of the Amendment by the full Senate.
In Brasilia, the government is not ruling out the prospect of having to resort to the “war budget” ploy once again in order to enable the payment of “Auxílio Brasil” (Brazil Aid), the replacement for “Bolsa Família” (Family Grant).
The commercial dollar closed up 0.25% at R$5.610 to sell and R$5.609 to buy, the highest level in a month.
Negative economic data in the euro zone weighed on the exchange rate, in addition to restrictions on circulation within the countries and for travelers due to the Omicron variant of the coronavirus. The maximum stood at R$5.640 and the minimum at R$5.580.
The future dollar maturing in December 2021 retreated 0.13% to R$5.607 in the last business of the day.
In the extended session of the future interest market, the DI for January 2023 rose 2 basis points to 11.88%, DI for January 2025 fell 10 basis points to 11.59%, and the DI for January 2027 dropped 11 basis points to 11.55%.
In the United States, President Joe Biden stated that there is no need for new lockdowns to address the advancing Omicron variant. This provided a further boost to the stock markets, which had been rising since early morning and were thus able to recover part of last Friday’s losses.
The Dow Jones closed down 0.68%, at 35,135 points; the S&P rose 1.32%, at 4,655 points; and the Nasdaq technology exchange increased 1.88%, at 15,782 points.
In Europe, the day also saw a partial recovery, with the stock markets closing up. The Stoxx 600 index comprising shares of companies in key sectors in 17 European countries closed up 0.69%.
The commodities segment also rose sharply yesterday, but pared gains throughout the session and was far from fully recovering from last week’s slump. WTI oil for January 2022 closed up 3.23%, at US$70.35. The Brent reference, for delivery in February, went in the opposite direction and lost 2.85%, at US$73.63 a barrel.