In 2018, when Bolsonaro won the election, the stock market dropped 0.09%, and the dollar advanced 2.43% in the same period.
At that time, the index had a slight retreat of 0.09%. It went from 85,720 points to 85,641 points.
Under Lula, the stock market went from 114,539 points to 112,253 points.
In other words, those who invested in an improvement in the stock market with Lula da Silva in office in the very short term lost money.
The main reason for the fall: Da Silva’s statements about spending caps with criticism of the “search for fiscal responsibility” displeased Faria Lima.
The stock market had risen 3.16% last week, the first week after Lula was elected.
Also, in the first week of the petista victory, the dollar had registered a drop of 4.49%. All (and more) has already been lost.
“I have never seen a market as sensitive as ours. It’s funny that this market didn’t get nervous after four years of Bolsonaro,” said the Brazilian presidential candidate at the end of the afternoon on Thursday (Nov. 10) as he left the transition team’s headquarters.
In his Twitter profile, he wrote: “You can stay calm.”
Da Silva’s transition team has names linked to the Rousseff government, such as former Finance Minister Guido Mantega and Nelson Barbosa.
There are two others more closely linked to the vice-president-elect Geraldo Alckmin, such as André Lara Resende and Persio Arida – names that defend greater liberalization of the economy.
It is not yet clear what line of government Lula da Silva will pursue.
So far, the transition team is looking for a way to change the Constitution to put a cap on public spending.
The goal is to pay for campaign promises, such as maintaining the Auxílio Brasil at R$600 (US$300) and an additional R$150 (US$300) for each child under the age of 6. In addition, Lula wants to readjust the minimum wage above inflation and invest more.
Lula says he has fiscal responsibility. Alckmin reinforces it. But so far, no measure to compensate for the hole in the ceiling has even been mentioned as a way to ease the expenses with aids and readjustments above inflation.
This is because Ibovespa has detached itself from the leading international indexes.
American stock markets rose with the better-than-expected inflation rate in the United States – which may cause the local monetary authority to reduce the pace of interest rate hikes.
POST-ELECTION DOLLAR
The behavior of the commercial dollar was also bad in the last few days. The US currency rose from R$3.65 to R$3.74 two weeks after the 2018 elections. After Lula’s victory, it jumped 2.43%, from R$5.30 to R$5.33.
But it had reached R$5.08 with a better outlook on his government.
In the opposite direction, Lula’s election has attracted money from international investors who approve of the PT’s return to the Presidential Palace.
There is an expectation that he can improve Brazil’s image abroad, especially in the environmental area.
Foreigners have put R$2.2 billion in the stock market this month until Wednesday (Nov. 9), the last available data.
HONEYMOON
The market reaction shows that Lula’s communication with investors is not working.
There was a honeymoon during the first week, but everything has waned.
The Petista’s speech on Thursday (Nov. 10) to allied members of Congress in Brasilia showed a government prone to repeat fiscal policies that went wrong in the past.
Investors immediately took notice, and the stock market plummeted.
To make things worse at Faria Lima, the president-elect said on Wednesday (Nov. 9) that he will only announce ministers after Nov. 19 – when he returns from his trips to Egypt and Portugal.
If nothing improves in this respect, the dollar will tend to remain unstable.
With information from Poder360