Brazil’s Financial Morning Call for October 7, 2024
Today’s economic agenda features several key events that could significantly impact Brazil’s financial markets and economic outlook.
The FGV IGP-DI inflation index for September will be released at 8:00 AM, providing insights into Brazil’s inflationary pressures.
At 8:25 AM, the Central Bank of Brazil will publish its weekly Focus Report, offering market expectations for various economic indicators.
Anfavea will release vehicle production and sales data for September at 11:00 AM, which is crucial for gauging the health of Brazil’s automotive sector.
The weekly trade balance report from Secex is scheduled for 3:00 PM, offering a snapshot of Brazil’s recent export and import performance.
Internationally, the Eurozone will release retail sales data for August at 6:00 AM, while the U.S. Federal Reserve will report on consumer credit for August at 4:00 PM. Mexico is also expected to release formal job creation figures for September.
These events are significant as they provide a comprehensive view of Brazil’s inflation trends, market expectations, industrial output, and trade performance, as well as insights into major global economies, all of which can influence investor sentiment and market movements in Brazil.
Economic Agenda, Monday, October 7
Brazil
- 8:00 AM: FGV: IGP-DI (Sep)
- 8:25 AM: BCB: Focus Report (weekly)
- 11:00 AM: Anfavea: Vehicle Production and Sales (Sep)
- 3:00 PM: Secex: Trade Balance (weekly)
Eurozone
- 6:00 AM: Retail Sales (Aug)
United States
- 4:00 PM: Fed: Consumer Credit (Aug)
Mexico
- Formal Job Creation (Sep)
Brazilian Markets on Friday
The Brazilian stock market closed with a modest increase on Friday, influenced by positive movements in New York following the release of U.S. employment data.
The main index finished at 131,791.55 points, up 0.09% or 120.04 points. Despite this small gain, the week ended with a loss for the index.
The Brazilian currency strengthened against the U.S. dollar, while future interest rates saw gains across the curve. These movements reflected ongoing economic uncertainties and market dynamics.
Market sentiment improved partly due to the resolution of a labor dispute in the United States. Wall Street indices closed positively, supported by a strong U.S. employment report that exceeded expectations.
U.S. Markets on Friday
U.S. stocks closed higher after a surprisingly strong U.S. jobs report raised optimism about the economy. The S&P 500 added 0.9% Friday and neared its all-time high set on Monday. The Dow climbed 0.8% and reached its own record. The Nasdaq rose 1.2%.
Banks, cruise-ship operators, and other companies whose profits can benefit the most from a stronger economy led the way.
However, jumping Treasury yields and diminished expectations for future cuts to interest rates by the Federal Reserve dragged down home builders, keeping the stock market’s gains in check.
Commodities Update
Oil futures concluded the week on a high note, marking their largest weekly gain of the year. The surge in prices came as a result of escalating tensions in the Middle East over the past seven days.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) crude for November delivery closed up 0.90% at $78.05 per barrel.
Brent crude for December delivery on the Intercontinental Exchange rose 0.55% to $74.38 per barrel. For the week, WTI crude posted an impressive gain of 9.35%, while Brent crude climbed 9.42%.
Currency Flow and Trade Balance
Brazil’s trade surplus for September 2024 fell to $5.363 billion, marking a 41.6% decrease from the same month in 2023. The Ministry of Development, Industry, Trade, and Services (MDIC) reported this figure, which surpassed market predictions of $4.7 billion.
In response, the government adjusted its 2024 trade balance projections downward. MDIC now anticipates a total surplus of $70.4 billion for 2024, reduced from its earlier forecast of $79.2 billion.
September’s exports remained stable at $28.789 billion, aligning with 2023 figures. However, shipments of oil, iron ore, soybeans, and corn decreased, offset by gains in coffee, sugar, meat, and cellulose exports.
Imports rose by 20% to $23.426 billion, driven by increased purchases of fertilizers, vehicle accessories, and medicines.
Corporate News
Several Brazilian companies made significant moves on Friday:
- ClearSale shares soared as Serasa Experian announced an acquisition deal.
- Localiza’s credit rating climbed with Brazil’s economic boost.
- Suzano reduced its 2024 cellulose production by 4% due to market challenges.
- Qualicorp shareholders cleared the founder in a political scandal.
- Brazilian pharmaceutical giant EMS set sights on global expansion.
Underlying Sentiment
Investors are closely monitoring Brazil’s fiscal situation, with particular focus on the growing budget deficit.
The government’s economic team estimates a deficit of R$28.3 billion ($5.15 billion) for 2024, while financial market agents expect a public accounts deficit of 0.6% of GDP.
This discrepancy is creating uncertainty in the financial markets, reflected in the recent stock market movements and currency fluctuations.
These issues are likely to continue influencing investor sentiment and market performance as the government struggles to balance its budget while maintaining economic growth.
Brazil’s fiscal challenges are hindering its path to an investment grade rating, despite recent positive economic indicators.
The country’s ability to address these fiscal concerns will be crucial for its economic outlook and market performance in the coming months.
Brazil’s Financial Morning Call for October 7, 2024
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Brazil Morning Call — Live Board
-0.46%
176,723.62
-0.46%
66,266.01
-1.54%
10,916.70
-0.84%
3,319,522
-1.78%
2,283.28
-0.60%
57,575.02
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| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 176,723.62 | -0.46% | +30.55% | 177,547.57 | — | — | — |
| USD/BRL | 5.08 | +0.50% | -7.91% | 5.05 | 5.09 | 5.08 | — |
| EUR/BRL | 5.78 | -0.26% | -10.89% | 5.80 | 5.79 | 5.78 | — |
| SELIC | 14.25% | — | — | — | — | — | |
| BRENT | 100.61 | -0.08% | +46.85% | 100.69 | 101.10 | 99.62 | 1,432 |
| WTI | 91.93 | -0.28% | +40.89% | 92.19 | 92.83 | 91.16 | 17,618 |
| IRON ORE | 161.91 | — | +64.76% | 161.91 | 161.91 | 1 | |
| GOLD | 4,026 | -0.51% | +18.61% | 4,047 | 4,054 | 4,025 | 14,228 |
| SILVER | 57.45 | -0.60% | +46.27% | 57.80 | 58.17 | 57.36 | 3,030 |
| LITHIUM | 69.02 | +0.03% | +55.17% | 69.00 | 69.68 | 68.65 | 135,477 |
| SOY | 1,248 | +0.83% | +24.06% | 1,238 | 1,248 | 1,240 | 5,915 |
| CORN | 488.75 | +5.33% | +22.65% | 464.00 | 489.25 | 486.00 | 14,094 |
| WHEAT | 700.50 | +0.61% | +29.60% | 696.25 | 702.00 | 694.75 | 3,171 |
| COFFEE | 310.75 | -1.86% | +3.12% | 316.65 | 321.30 | 308.25 | — |
| SUGAR | 14.68 | -0.41% | -9.61% | 14.74 | 14.90 | 14.65 | — |
| ORANGE JUICE | 145.50 | -3.19% | -56.77% | 150.30 | 148.80 | 144.00 | — |
| COTTON | 81.53 | +2.08% | +22.38% | 79.87 | 81.75 | 79.75 | 15,710 |
| BEEF | 221.48 | -0.77% | -2.44% | 223.20 | 221.90 | 217.38 | 19,933 |
| CATTLE | 340.13 | -0.31% | +2.59% | 341.17 | 340.50 | 333.00 | 9,414 |
| COCOA | 5,367 | +0.73% | -36.41% | 5,328 | 5,411 | 5,165 | — |
| PETR4 | 42.95 | +0.87% | +34.26% | 42.58 | 43.49 | 42.86 | 25,169,000 |
| VALE3 | 75.68 | +0.77% | +31.80% | 75.10 | 77.07 | 74.51 | 15,786,300 |
| SUZB3 | 42.43 | -0.54% | -18.01% | 42.66 | 42.43 | — | — |
| KLABIN | 17.66 | -1.51% | -4.57% | 17.93 | 17.66 | — | — |
| SLCE3 | 13.77 | -1.36% | -14.13% | 13.96 | 14.06 | 13.69 | 2,340,100 |
| ABEV3 | 15.92 | -1.30% | +17.14% | 16.13 | 16.11 | 15.84 | 18,905,100 |
| ITUB4 | 42.56 | -0.79% | +23.87% | 42.90 | 42.87 | 42.27 | 22,565,100 |
| BBDC4 | 18.72 | -1.32% | +17.88% | 18.97 | 18.72 | — | — |
| BBAS3 | 20.93 | -0.76% | +3.56% | 21.09 | 20.93 | — | — |
| B3SA3 | 15.65 | -1.57% | +16.88% | 15.90 | 15.82 | 15.48 | 41,084,700 |
| WEGE3 | 45.67 | -2.29% | +20.15% | 46.74 | 45.67 | — | — |
| PRIO3 | 60.54 | +1.29% | +42.55% | 59.77 | 61.35 | 60.54 | 6,347,300 |
| RENT3 | 37.14 | +0.00% | +2.51% | 37.14 | 37.14 | — | — |
| AZZA3 | 17.05 | -4.27% | -54.07% | 17.81 | 17.71 | 17.03 | 2,368,800 |
| CSNA3 | 5.30 | -1.49% | -39.57% | 5.38 | 5.61 | 5.30 | 12,053,100 |
| GGBR4 | 24.06 | +0.00% | +39.72% | 24.06 | 24.41 | 23.83 | 7,631,200 |
| ENEV3 | 25.70 | -1.04% | +83.70% | 25.97 | 25.80 | 25.45 | 3,301,300 |
| LREN3 | 13.37 | -1.26% | -24.16% | 13.54 | 13.37 | — | — |
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