Brazil’s Ibovespa interrupts 7-high streak and tumbles on Ukraine tension

RIO DE JANEIRO, BRAZIL – After 7 straight bullish sessions, the Ibovespa closed the day down 1.43%, at 113,528 points.

In the morning, U.S. President Joe Biden said that the chance of Russia invading Ukraine is “very high.” Biden also said that “there are reasons not to believe” in Russia. The statement pushed global stock markets down.

Dow Jones (U.S.): – 1.83%

S&P 500 (U.S.): – 2.07%

Nasdaq (U.S.): – 2.69%

Stoxx 600 (Europe): – 0.69%

To add to the tensions, earlier in the day the Russian government expelled from the country U.S. diplomat Bart Gorman, deputy chief of the U.S. embassy in Moscow. In the aftermath, the United States warned of a potential response from the Americans amid concerns of a Russian invasion of Ukraine.

The risk-aversion scenario also impacted the dollar, with the U.S. currency rising 0.76% to R$5.167. This was the first appreciation against the Brazilian Real in 5 trading sessions.

The negative trend in the Brazilian stock market was compounded by a drop in the commodities sector. The largest negative pressure came from Vale’s (VALE3) shares, which fell over 4% after iron ore receded for the 4th consecutive day in China.

The drop was driven by pressure from the Chinese government to contain rising prices. Chinese regulators met with commodities traders for the second time in the week to review stocks and recent trading involving ore.

The mining company was among the Ibovespa’s top losses along with steel mills, also hampered by the commodity’s depreciation.

CSN (CSNA3): – 5.85%

Gerdau (GGBR4): – 5.32%

Gerdau Metalúrgica (GOAU4): – 5.39%

Vale (VALE3): – 4.32%

Usiminas (USIM5): – 4.38%

On the positive side of the index, Totvs (TOTS3) was among the highest risers as investors reacted to the 4th quarter 2021 statement. The company posted net income of R$120.3 (US$23.2) million in the period, representing annual growth of 25%. The figure also surpassed Bloomberg’s consensus of R$112.3 million in profit. Revenue grew 34% to R$920.7 million.

Totvs (TOTS3): + 5.81%

“The results reinforce our positive stance towards Totvs. The company has a core business that is growing well, unique cross-selling opportunities and great prospects in financial services,” analysts at BTG Pactual said in a report.

Another stock that reacted positively to the fourth quarter results was EDP Energias do Brasil (ENBR3). The company had an Ebitda of R$1.34 billion, down 4% year-on-year. Revenues stood at R$4.67 billion.

EDP Brasil (ENBR3): + 3.63%.

Outside Ibovespa, Kepler Weber (KEPL3) rose by more than 8% after posting net income of R$84 million in the fourth quarter, up 243% from the same period in 2020. The profit was driven by reduced operating expenses. Guide analyst Rodrigo Crespi considered the figures positive.

“The result came in above market estimates. In addition, the company reported net cash of R$75 million, reinforcing its position on a potential deterioration of the scenario for commodities,” he said in a report.

Kepler Weber (KEPL3): + 8.87%.