The Ibovespa, Brazil’s primary stock index, narrowly avoided a seventh straight day of losses by closing slightly higher, marking a marginal increase of 0.02%, to settle at 124,196 points.
This small rise followed a dip to its lowest point of 2024 earlier in the day at 123,396 points.
Concurrently, the Brazilian Real appreciated slightly by 0.12% to R$5.25, hitting a daily peak of R$5.28. Domestic fiscal issues and global uncertainties continue to exert pressure on the market.
Lucas Queiroz, a fixed income strategist from Itaú BBA, noted the Federal Reserve’s recent hints at dependency on economic data for future interest rate cuts.
The Fed is expected to delay monetary policy changes, waiting for a significant inflation slowdown over the next three months.
Itaú BBA now anticipates that rate cuts may not commence until December, despite market expectations for a September start.
“Adjusting rate cut expectations with each inflation report during an election period is unproductive,” Queiroz commented.
This approach aims to support ongoing economic stability and achieve a 2% inflation target.
Brazil’s economic strategies are affected by global uncertainties, acknowledged by Fernando Haddad, Minister of Finance, and Roberto Campos Neto, Central Bank President.
They suggest that rising global tensions might necessitate a reassessment of their risk management strategies.
XP’s chief economist Caio Megale noted in a Morning Call that increasing U.S. interest rates complicate global inflation control strategies.
Market Insights
On the trading floor, Vale shares started strong due to an uptick in iron ore prices but faltered as the day progressed.
Petrobras shares saw fluctuations but gained modestly, influenced by mixed oil price signals and reassurances on stable fuel pricing.
Meanwhile, merger talks between Azul and Gol Airlines have reportedly advanced, significantly impacting their stock movements.