Brazil’s Ibovespa opens weak with forecast of stronger monetary tightening in 2023

The Ibovespa (on São Paulo stock market B3) is down 0.15% in the opening of today’s trading session (Jan. 16), at 110,753 points near 10:10 am, Brasília time.

Investors keep an eye on the situation of Americanas, which received protection for thirty days against the early maturity of debts.

In the United States, the week begins with the Martin Luther King Day holiday, which keeps the stock markets there closed.

The dollar drops 0.01% against the real around 10:10 am. The currency was trading at R$5.10.

According to the Focus survey released today, analysts consulted by the Central Bank began to see less monetary easing this year amid higher expectations for inflation.

The survey shows that experts now calculate the basic interest rate Selic at 12.50% at the end of this year, up from 12.25% in the previous week.

For 2024, the outlook is for a Selic rate of 9.25%.

Currently, the rate is at 13.75%, which should be maintained at the Central Bank’s monetary policy meeting on Jan. 31 and Feb. 1.

In addition, the report also pointed to an increase in expectations for the rise in the IPCA this year for the fifth time in a row, reaching 5.39% from 5.36% previously.

For next year inflation continues to be calculated at 3.70%.

In the corporate scenario, Americanas obtained an important decision from the courts protecting it for 30 days against early maturity of debts, a period that the retailer may use to reach an agreement with creditors or seek judicial recovery.

The move comes after the retailer reported R$20 (US$4.1) billion in accounting “inconsistencies,” shocking the market in a scandal that precipitated the resignations of its recently appointed CEO and CFO.

In the order, Judge Paulo Assed Estefan, from the 4th Business Court in Rio de Janeiro, states that it is “entirely justifiable to grant the measure, to avoid the depletion of all the company’s assets by highly qualified creditors, to the detriment of other creditors, and especially the maintenance of economic activity itself.

In Brasilia, Banco do Brasil announced today that President Luiz Inácio Lula da Silva had nominated Tarciana Paula Gomes Medeiros as the B.B.’s president.

“Fausto de Andrade Ribeiro has exercised his functions (of the president) until 15/01/2023, and the inauguration of Ms. Tarciana Paula Gomes Medeiros will take place this Monday,” the bank said in a relevant fact.

INTERNATIONAL MARKETS

In the United States, the week starts with the Martin Luther King Day holiday, which keeps the stock markets there closed.

On Friday (Jan. 13), the Federal Reserve said it would return substantially less money to the U.S. Treasury in 2022 than a year earlier amid increased interest expenses linked to its work to reduce inflation.

The U.S. central bank also stated that its net income last year was US$58.4 billion, compared with US$107.9 billion in 2021.

The Fed pointed out that in September last year, it began recording a deferred asset that accounts for the loss of US$18.8 billion at year-end.

China’s stocks rose to a four-month high in Asia, boosted by strong foreign inflows.

Over there, Hong Kong’s market advanced as investors doubled down on bets on economic recovery after Chinese health officials said Covid-19 infections in the country had peaked.

Over there, China’s central bank stepped up liquidity injections by offering more loans to some banks through its medium-term lending facility, a move ahead of the Lunar New Year when companies and households typically seek more funds.

Hong Kong’s Hang Seng appreciated 0.04%, and Mumbai’s BSE Sensex closed the day down 0.28%. In mainland China, the Shanghai index gained 1.01%; and in Japan, the Nikkei index retreated 1.14%.

In Europe, the World Economic Forum in Davos, Switzerland, starts today and is one of the main focuses of the markets this week.

The main topics to be discussed are the war in Ukraine, economic uncertainty, and climate change.

The Stoxx 600 gained 0.24%; in Germany, the DAX is up 0.21%; the CAC 40 is up 0.17% in France; in Italy, the FTSE MIB is up 0.23%; while the FTSE 100 is up 0.13% in the U.K.
Commodities

Iron ore futures fell today as reports of increased Covid-19 deaths in China, the world’s largest steel producer, renewed concerns about demand.

The most-traded iron ore for May on China’s Dalian Commodity Exchange ended daytime trading down 4.3% at 832.5 yuan a tonne.