Brazil’s Financial Morning Call for November 15, 2024
As trading commences on Friday, November 15, 2024, investors are navigating a day with limited domestic activity due to Brazil observing Republic Day, a national holiday. Republic Day commemorates the end of the Empire of Brazil and the proclamation of the Brazilian Republic on November 15, 1889.
This holiday is significant for Brazilian markets, as the B3 and other financial institutions are closed for the day. While Brazilian markets are closed, key economic indicators from the United Kingdom and the United States are poised to significantly influence international financial dynamics and may impact Brazilian markets upon reopening.
The closure of Brazilian markets on this day affects various financial instruments, including the USDBRL currency pair, which will not be traded.
United Kingdom
The Gross Domestic Product figures provide insight into the UK’s economic growth. Strong GDP growth can boost investor confidence globally, potentially strengthening the British pound and impacting international trade relations.
- Trade Balance (Sep): This indicates the difference between the value of exports and imports. A trade surplus suggests a competitive economy and can positively influence currency markets, while a deficit may raise concerns about economic sustainability.
- Industrial Production (Monthly) (Sep): This measures the output of the UK’s industrial sector, reflecting manufacturing health. An increase in industrial production signals economic expansion, which can affect global commodity prices and supply chains.
United States:
At 10:30 AM, the Retail Sales (Monthly) (Oct) data will be released. This key indicator of consumer spending drives a significant portion of the US economy. Higher retail sales suggest robust consumer confidence and economic growth, potentially influencing the Federal Reserve’s monetary policy decisions.
At 11:15 AM, the Industrial Production (Annual) (Oct) figures will be announced. This measures the total output from manufacturers, mines, and utilities. An increase in industrial production indicates economic strength and can affect global markets and commodity prices, including demand for Brazilian exports.
While Brazilian markets are closed today, these international economic events could influence global market sentiment, currency exchange rates, and commodity prices, impacting Brazilian financial markets when they resume trading.
Economic Calendar for Friday, November 15
Brazil
- Holiday – Republic Day
United Kingdom
- 4:00 AM – GDP
- 4:00 AM – Trade Balance (Sep)
- 4:00 AM – Industrial Production (Monthly) (Sep)
United States
– 10:30 AM – Retail Sales (Monthly) (Oct)
– 11:15 AM – Industrial Production (Annual) (Oct)
Brazil’s Market Performance on Thursday
On November 14, 2024, the Brazilian stock market, represented by the Ibovespa index, maintained its position above 127,000 points for the fifth consecutive trading session. This stability comes as investors await fiscal measures and digest the impact of Wall Street’s decline following Federal Reserve Chairman Jerome Powell’s recent remarks.
The Ibovespa closed with a slight increase of 0.05%, reaching 127,791.60 points. The index remained virtually unchanged for the week, with a minimal decrease of 0.03%. Meanwhile, the US dollar ended the day at R$5.7881, a marginal decline of 0.02%.
Brazil’s Q3 Economic Activity Rises 1.1%, Surpassing Expectations
Investors in Brazil are closely monitoring economic data and statements from central bank officials. The Central Bank’s Economic Activity Index (IBC-Br) showed a 0.80% increase in September compared to the previous month. This figure surpassed expectations and contributed to a 1.1% growth in the third quarter. The positive data suggests robust economic activity, potentially influencing future monetary policy decisions.
Focus: Financial Market Forecasts R$ 62 Billion Deficit for 2024
Brazil’s financial analysts have adjusted their projections for the primary deficit in 2024. The latest estimate stands at R$ 62 billion ($10.88 billion), down from R$ 63.83 billion ($11.20 billion) in October. This forecast comes from the “Prisma Fiscal” report released by the Ministry of Finance on Thursday, November 14, 2024.
Service Sector Growth Signals Robust Consumer Spending in Brazil
Brazil’s service sector showed remarkable growth in September 2024, reaching a new peak in the historical series. The sector expanded by 1% compared to August, surpassing economists’ expectations. This growth indicates that consumer spending remains strong, contributing to a positive GDP performance in the third quarter.
Dollar Remains Stable Against Real as Markets Await Fiscal Package
The US dollar maintained a stable position against the Brazilian real on Thursday, defying expectations of significant movement. The exchange rate closed at R$ 5.7881, showing a minimal change of -0.02% from the previous session.
Corporate Highlights
Minas Gerais State Proposes Privatization of Energy Giant Cemig
The state of Minas Gerais has proposed the privatization of Cemig, one of Brazil’s largest energy companies. The move is part of a broader strategy to attract investment and improve efficiency in the energy sector. Privatization could lead to increased competitiveness and modernization but may face political and public opposition.
Fixed Income Surge Offsets B3’s Stock Market Slowdown in Q3 2024
B3, Brazil’s stock exchange operator, reported that a surge in fixed-income trading offset a slowdown in the stock market during the third quarter of 2024. The shift indicates investor preference for lower-risk assets amid economic uncertainty. B3’s diversification of services helps maintain its revenue streams despite fluctuations in equity markets.
Cosan’s Q3 Profit Drops 57% as Debt Surges
Energy and logistics conglomerate Cosan reported a 57% drop in third-quarter profits due to increased debt levels. The company faces financial challenges stemming from investments and market volatility. The rising debt impacts Cosan’s profitability and may affect its future investment capacity.
Rede D’Or’s Q3 2024 Results Highlight Brazil’s Resilient Healthcare Sector
Rede D’Or, Brazil’s largest hospital network, posted strong third-quarter results, highlighting the resilience of the healthcare sector. Growth is driven by increased demand for medical services and strategic acquisitions. The company’s performance underscores the importance of healthcare in the Brazilian economy.
Hypera Pharma’s Q3 Results: Revenue Down, Cash Flow Up
Pharmaceutical company Hypera Pharma reported decreased revenue in the third quarter of 2024 but improved cash flow. The company is focusing on cost optimization and operational efficiency to navigate challenging market conditions. The increased cash flow strengthens Hypera’s financial position despite revenue declines.
Cyrela’s Q3 Profit Jumps 88% as Brazil’s Luxury Real Estate Booms
Real estate developer Cyrela reported an 88% increase in third-quarter profits, benefiting from a booming luxury real estate market in Brazil. High-end property demand is surging, driven by low-interest rates and wealth growth among high-net-worth individuals. Cyrela’s strong performance reflects robust market conditions in the luxury segment.
Americanas’ Debt Haircut Yields Profit, but E-commerce Struggles Persist
Retailer Americanas achieved a profit in the third quarter of 2024 after restructuring its debt but continues to face challenges in its e-commerce operations. Despite financial relief from the debt haircut, the company struggles with competition and market share in the online retail space.
BRF Turns R$262M Loss into R$1.1B Profit in Q3 2024
Food processing company BRF reversed a R$262 million loss from the previous period to post a R$1.1 billion profit in the third quarter of 2024. The turnaround is attributed to cost-cutting measures, improved operational efficiency, and favorable market conditions. BRF’s recovery signals positive momentum in the agribusiness sector.
Banco do Brasil’s Q3 Profit Rises 8.3% Despite Credit Concerns
State-owned Banco do Brasil reported an 8.3% increase in third-quarter profit, even as concerns over credit quality persist. The bank’s solid performance is driven by increased lending and financial services, though potential defaults remain a concern due to economic uncertainties.
Equatorial’s EBITDA Reaches R$2.93 Billion in Q3 2024
Energy company Equatorial Energia reported an EBITDA of R$2.93 billion in the third quarter of 2024, reflecting strong operational performance. Growth is supported by increased energy demand and successful expansion projects. Equatorial’s financial health positions it well for future investments.
JBS Profit Soars 571%; Rewards Shareholders with R$2.2 Billion Dividend Payout
Meat processing giant JBS reported a staggering 571% increase in profit for the third quarter of 2024, announcing a R$2.2 billion dividend payout to shareholders. The surge is due to strong global demand for protein, currency effects, and operational efficiencies.
Ultrapar’s Q3 Profit Falls 21.6% Despite Revenue Growth
Ultrapar, a conglomerate operating in fuel distribution and specialty chemicals, reported a 21.6% decline in third-quarter profit despite revenue growth. Increased costs and expenses have pressured margins, raising concerns about operational efficiency.
Ambipar’s Q3 Profit Soars 27.9% as Revenue Hits Record High
Environmental services company Ambipar reported a 27.9% increase in third-quarter profit, with revenue reaching a record high. The growth is driven by expanding demand for environmental solutions and successful acquisitions, highlighting the sector’s potential.
International Influence
U.S. stocks slipped as the market’s significant surge following recent events continued to cool.
- The S&P 500 dipped 0.6% on Thursday.
- The Dow Jones Industrial Average dropped 0.5%.
- The Nasdaq Composite sank 0.6%.
Several areas of the market that had bounced highest reversed their momentum and led the way lower. Short-term Treasury yields swung following the latest economic reports before rising after Federal Reserve Chairman Jerome Powell indicated that the Federal Reserve is not in a hurry to cut interest rates.
Market Indices on Thursday:
- S&P 500 fell 36.21 points, or 0.6%, to 5,949.17.
- Dow Jones Industrial Average fell 207.33 points, or 0.5%, to 43,750.86.
- Nasdaq Composite fell 137.07 points, or 0.6%, to 19,107.65.
- Russell 2000 index of smaller companies fell 32.43 points, or 1.4%, to 2,336.94.
For the Week:
- S&P 500 is down 46.37 points, or 0.8%.
- Dow is down 238.13 points, or 0.5%.
- Nasdaq is down 179.13 points, or 0.9%.
- Russell 2000 is down 62.70 points, or 2.6%.
Commodity Markets
Oil Prices Rise Amid Fluctuating Demand Indicators and U.S. Inventory Data
Oil prices have risen due to fluctuating demand indicators and recent U.S. inventory data. Factors such as geopolitical tensions, production adjustments by major oil producers, and uncertainty over global economic growth continue to influence prices. Rising oil prices can benefit Brazil’s export revenues but may also contribute to domestic inflation.
Gold Prices Slip as Dollar Strengthens; A Five-Day Decline Reflects Market Shifts
Gold prices have dipped for the fifth consecutive session, influenced by a strengthening U.S. dollar and positive economic indicators. As gold is often seen as a safe-haven asset, declining prices may reflect increased investor confidence in the global economy and reduced demand for risk-averse investments.
Outlook
Markets are expected to remain cautious as investors digest international economic data and await further developments in fiscal measures. The positive economic activity in Brazil, as indicated by the IBC-Br, suggests robust growth, but uncertainty remains due to global economic conditions and potential shifts in monetary policy.
Investors will closely monitor:
- Global Economic Indicators: The GDP and industrial production data from the UK and the US retail sales and industrial production figures will provide insights into the health of major economies, influencing global market sentiment.
- Monetary Policy Signals: Comments from central bank officials, particularly regarding interest rate decisions, could impact investor risk appetite and capital flows into emerging markets like Brazil.
- Commodity Prices: Fluctuations in oil and gold prices will affect Brazil’s export revenues and inflation dynamics, influencing economic policy considerations.
- Corporate Earnings: Ongoing earnings reports from major Brazilian companies will offer insights into corporate health and sector performance, influencing stock valuations when markets reopen.
While domestic markets are closed today, global events will continue to shape the investment landscape, and their effects will likely be felt when Brazilian markets resume trading after the holiday.
Note: All times are in Brasília Time (BRT).
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Brazil Morning Call — Live Board
+0.46%
183,827.59
+0.46%
65,071.30
+0.20%
11,055.91
-0.73%
2,782,561
-0.59%
2,558.92
-0.79%
60,220.45
+0.32%
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 183,827.59 | +0.46% | +21.85% | 182,991.13 | 168,310 | 167,142 | — |
| USD/BRL | 5.16 | +0.01% | -5.13% | 5.16 | 5.18 | 5.14 | — |
| EUR/BRL | 5.95 | +1.01% | -5.83% | 5.89 | 5.98 | 5.94 | — |
| SELIC | 14.00% | — | — | — | — | — | |
| BRENT | 88.88 | -0.03% | +34.42% | 88.91 | 90.07 | 88.12 | 29,713 |
| WTI | 83.11 | -0.11% | +31.57% | 83.20 | 84.35 | 82.40 | 166,848 |
| IRON ORE | 161.91 | — | +58.10% | 161.91 | 161.91 | 1 | |
| GOLD | 4,461 | +1.78% | +33.20% | 4,383 | 4,503 | 4,421 | 139,824 |
| SILVER | 65.59 | +1.26% | +73.05% | 64.77 | 66.98 | 64.81 | 46,406 |
| LITHIUM | 75.20 | +1.47% | +62.95% | 74.11 | 75.80 | 75.08 | 89,275 |
| SOY | 1,184 | +3.20% | +17.05% | 1,148 | 1,199 | 1,168 | 163,179 |
| CORN | 480.50 | +10.02% | +29.34% | 436.75 | 480.75 | 459.50 | 341,248 |
| WHEAT | 655.00 | +3.93% | +29.70% | 630.25 | 657.75 | 631.50 | 128,793 |
| COFFEE | 317.25 | -5.51% | +0.67% | 335.75 | 321.20 | 313.55 | 21,747 |
| SUGAR | 16.43 | -1.79% | -3.01% | 16.73 | 17.11 | 16.22 | 171,992 |
| ORANGE JUICE | 138.55 | -0.47% | -45.38% | 139.20 | 141.05 | 137.50 | 703 |
| COTTON | 85.03 | +2.33% | +26.78% | 83.09 | 82.90 | 81.96 | 16,546 |
| BEEF | 223.60 | -3.93% | -5.18% | 232.75 | 226.40 | 223.00 | 16,126 |
| CATTLE | 339.10 | -3.16% | -1.82% | 350.17 | 345.50 | 338.60 | 10,164 |
| COCOA | 5,719 | +3.18% | -34.96% | 5,543 | 5,779 | 5,574 | 26,773 |
| PETR4 | 41.64 | -0.05% | +35.19% | 41.66 | 41.97 | 41.15 | 41,499,400 |
| VALE3 | 72.97 | +0.83% | +30.75% | 72.37 | 73.54 | 72.66 | 17,658,000 |
| SUZB3 | 41.33 | +2.35% | -23.55% | 40.38 | 41.48 | 40.35 | 3,914,900 |
| KLABIN | 17.69 | +0.80% | -2.95% | 17.55 | 17.74 | 17.48 | 2,057,400 |
| SLCE3 | 13.34 | +0.30% | -12.25% | 13.30 | 13.42 | 13.20 | 1,454,200 |
| ABEV3 | 14.89 | -0.80% | +21.91% | 15.01 | 15.07 | 14.81 | 16,453,100 |
| ITUB4 | 38.60 | -1.03% | +4.57% | 39.00 | 39.34 | 38.39 | 29,487,800 |
| BBDC4 | 16.85 | +0.36% | +3.50% | 16.79 | 16.90 | 16.67 | 19,416,900 |
| BBAS3 | 19.37 | +0.47% | +0.73% | 19.28 | 19.44 | 19.16 | 11,069,200 |
| B3SA3 | 14.26 | -0.21% | +12.73% | 14.29 | 14.47 | 14.11 | 33,037,800 |
| WEGE3 | 47.59 | +0.49% | +29.99% | 47.36 | 48.08 | 47.36 | 3,364,600 |
| PRIO3 | 59.14 | -0.19% | +50.67% | 59.25 | 59.81 | 58.74 | 3,325,600 |
| RENT3 | 34.68 | -0.09% | +0.84% | 34.71 | 34.96 | 34.35 | 7,979,100 |
| AZZA3 | 15.89 | -2.63% | -53.76% | 16.32 | 16.42 | 15.82 | 1,330,300 |
| CSNA3 | 4.30 | +0.47% | -42.65% | 4.28 | 4.41 | 4.26 | 10,076,100 |
| GGBR4 | 24.69 | +2.19% | +51.38% | 24.16 | 24.85 | 24.18 | 7,047,600 |
| ENEV3 | 24.21 | -1.38% | +70.49% | 24.55 | 24.64 | 23.99 | 9,297,000 |
| LREN3 | 11.87 | -1.33% | -28.65% | 12.03 | 12.17 | 11.83 | 9,683,300 |
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