Brazil’s Financial Morning Call for September 25, 2024

Today’s economic agenda is packed with crucial indicators that could significantly impact global markets and Brazil’s economic outlook.

The release of the IPCA-15 inflation data takes center stage, offering insights into Brazil’s inflationary pressures.

The FGV Construction Survey will provide valuable data on sentiment in the construction sector, which has recently hit a two-year high in confidence.

Internationally, the OECD Economic Outlook will be closely watched for global economic projections, especially in light of recent challenges to climate goals by OPEC’s forecast of continued oil dominance.

Additionally, Brazil’s Central Bank will release data on Foreign Direct Investment and Current Account Transactions for August, which will offer insights into the country’s external economic position.

These indicators collectively will shape market sentiment and potentially influence monetary policy decisions in Brazil and globally.

Economic Agenda, Wednesday, September 25

• 05:00 AM: FIPE: IPC (weekly)
• 08:00 AM: FGV: INCC-M (Sep)
• 08:00 AM: FGV: Construction Survey (Sep)
• 08:30 AM: BCB: Press Release – FDI (Aug)
• 08:30 AM: BCB: Press Release – Current Account Transactions (Aug)
• 09:00 AM: IBGE: IPCA-15 (Sep)
• 14:30 PM: BCB: Foreign Exchange Flow (weekly)
• 06:00 AM: OECD: Economic Outlook

Brazilian Markets on Tuesday

The Brazilian stock market roared back to life on Tuesday, breaking its five-day losing streak with a decisive upward move.

The Ibovespa, Brazil’s primary stock index, climbed 1.22% to close at an impressive 132,155.76 points.

This remarkable turnaround was largely fueled by renewed optimism surrounding China’s economic prospects.

In the currency markets, the US dollar weakened significantly against the Brazilian real. It fell 1.31% to trade at 5.4628 reais, reflecting shifting global economic sentiments.

U.S. Markets on Tuesday

U.S. stocks edged further into record heights on Wall Street after shaking off a bumpy start to the day.

The S&P 500 rose 0.3% Tuesday. The Dow Jones Industrial Average edged up 0.2%, adding to its own record. The Nasdaq composite gained 0.6%.

Treasury yields sank in the bond market following an update on U.S. consumer confidence that was surprisingly weak.

Prices for oil, copper and other commodities rallied following a slew of moves by China’s central bank to prop up the world’s second-largest economy. Chinese stocks closed sharply higher.

• The S&P 500 rose 14.36 points, or 0.3%, to 5,732.93.
• The Dow Jones Industrial Average rose 83.57 points, or 0.2%, to 42,208.22.
• The Nasdaq composite rose 100.25 points, or 0.6%, to 18,074.52.
• The Russell 2000 index of smaller companies rose 3.71 points, or 0.2%, to 2,223.99.

Gold and Oil Prices

The recent surge in gold prices, hitting record highs for the fourth consecutive day, reflects global economic shifts and could impact Brazil’s mining sector.

Meanwhile, oil prices have jumped due to China’s economic stimulation and rising Middle East tensions, potentially affecting Brazil’s energy sector.

Corporate News

Brazilian food giant JBS has approved an 18-month stock repurchase program, signaling confidence in its future performance.

In a positive development for another major player, Moody’s has upgraded BRF’s credit rating based on strong performance.

Banks remain confident in Vale despite uncertainties in China, which could bode well for Brazil’s mining sector. However, Azul airlines faces a liquidity crisis, with rating agencies sounding warnings.

Usiminas, a major Brazilian steel producer, has secured a stable credit rating from Moody’s, affirming its financial strength.

China Effect

In the commodities market, CSN led Ibovespa’s gains, buoyed by China’s announcements of new economic stimulus measures.

Other major players in the mining and steel sectors also benefited from the positive sentiment. Usiminas and Vale saw significant gains, riding the wave of rising iron ore prices.

Underlying Sentiment

The industrial sector’s outlook on the economy brightened in September, marking a significant shift in sentiment.

The Industrial Entrepreneur Confidence Index (Icei), released by the National Confederation of Industry (CNI), revealed a surge in optimism.

Twenty-six out of twenty-nine surveyed sectors expressed confidence in the future, a record not seen since October 2022.

This widespread positivity stems from improved perceptions of current economic conditions among business leaders.

In recent months, their assessment of the economic landscape has steadily improved, bolstering the overall confidence index.

Only three segments—wood, rubber products, and specialized construction services—remained pessimistic.

The Icei operates on a scale where scores below 50 indicate skepticism, while those above signify optimism.

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