The Ibovespa, B3’s (São Paulo Stock Exchange) main index, fell 4.86% since the Electoral Court TSE pronounced Luiz Inácio Lula da Silva (PT, progressive/globalist) as President-elect of the largest Ibero-American country.
It went from 114,539 points to 108,976 points.
The economic agents operate with caution with negotiating the PEC (Proposal of Amendment to the Constitution).
The transition government presented a text that foresees taking R$198 (US$38) billion from the spending ceiling.
Investors have concerns about a fiscal imbalance that could trigger an increase in public debt, inflation, and interest rates.
The future interest rates closed high on the B3. The contracts maturing in January 2025 increased from 13.65% to 13.90% this Friday (Nov. 25).
The market reacted badly to the speech given by Fernando Haddad, the former Minister of Education, who is tipped to take over the Ministry of Economy.
He spoke at a Febraban (Brazilian Federation of Banks) event, representing the president-elect.
He said that the spending cap has not managed to stop the worsening of public spending but did not present proposals to ensure fiscal responsibility of the future government.
The market’s frustration is also justified by the fourth week in a row that the elected government has not said who will be part of the economic team.
For now, in addition to Fernando Haddad at the Treasury, economist Pérsio Arida may take on the Ministry of Planning.
Investors welcome his possible appointment.
The scenario of caution is also perceived with the quotation of the commercial dollar.
The North American currency closed at R$ 5.41. The value represents a rise of 2.08% in relation to the day before the elections.
In the first 4 weeks of the Jair Bolsonaro (PL, right) government, the Ibovespa rose 0.59%, and the dollar advanced 4.66%.
Futures interest rates maturing in January 2025 have risen 1.98 percentage points since Lula’s victory.
In 2018, the first 4 weeks recorded a 0.26 percentage point drop in interest rates contracted for January 2021.
Known as Brazil risk, the 5-year CDS (Credit Default Swap) was at 262 points on Friday (Nov.25, 2022).
It has dropped 17.5 points since the election.
With information from Poder360