Friday’s Morning Call: Brazilian Market Insights Before Opening
Today’s economic activity concludes without significant new data, prompting investors to reflect on Thursday’s events to gauge future market trends.
On Thursday, the Ibovespa index fell 1.39%, closing at 127,652 points. Throughout the session, it ranged between 128,741 and 129,658 points.
The trading volume was R$13.44 ($2.4) billion on Ibovespa and R$20.20 billion on B3 .
Market sentiment was weighed down by concerns over potential budget cuts in 2024, with speculation suggesting the cuts might be less than R$10 billion, fueling pessimism.
However, the actual cut announced was R$15 billion (details below).
Sector Performance
Interest rate-sensitive domestic stocks led the losses. Meat processing companies, such as
- BRF ON (-7.88%),
- Marfrig ON (-9.08%), and
- JBS (-2.45%),
dropped due to concerns over a Newcastle disease outbreak.
Azul PN shares plummeted 7.87% amid dollar appreciation against the real and CADE’s review of a cooperation agreement between Azul and Gol.
US Market Recap
In the US, stock indices ended with significant losses for the second consecutive day.
The Dow Jones fell by 1.29% to 40,665.02 points, the S&P 500 dropped by 0.78% to 5,544.59 points, and the Nasdaq decreased by 0.70% to 17,871.2 points.
Declines in tech stocks pressured the markets, with ten out of eleven S&P 500 sectors in the red, led by healthcare (-2.29%), financials (-1.28%), and consumer discretionary (-1.28%).
Key Developments to Watch
Budget Freeze Announcement
Brazil announced a R$15 billion budget freeze for 2024 to stabilize its financial outlook.
Finance Minister Fernando Haddad detailed that R$11.2 billion would act as a financial buffer and R$3.8 billion for contingencies.
This move underscores the government’s commitment to fiscal discipline. The dollar surged nearly 2% to R$5.586 amid fiscal stability concerns.
Embraer’s Performance
Embraer reported a 20% increase in its order backlog, reaching $21.1 billion in Q2 2024, its highest in seven years.
The company delivered 47 aircraft in Q2, up 88% from Q1, with adjusted net profit rising by 20% to R$279.3 million.
Revenue increased by 26% year-over-year to R$6.3 billion, with adjusted EBITDA at R$724.1 million.
Sabesp Privatization
Sabesp’s privatization attracted institutional demand of R$187 billion, marking a historic high. Equatorial acquired a 15% stake for R$6.8 billion, surpassing previous records.
Petrobras Strategy
Petrobras is negotiating to reclaim the Mataripe refinery from Acelen, reflecting President Lula’s strategy to centralize Brazil’s fuel industry.
This move aligns with broader efforts to reverse previous privatizations and enhance national control over strategic assets.
Oi’s Auction and Stock Impact
Oi’s shares fell sharply following an underwhelming auction for ClientCo, resulting in only one bid significantly below expectations.
The stock dropped 20.8% this week, with judicial administrators now reviewing the offer.
Additional Highlights
- Oil prices showed mixed movements, with Brent crude rising slightly to $85.11 per barrel, while WTI fell to $81.30 per barrel.
- Vale’s Board Chairman assured the integrity of the CEO succession process amidst speculation.
- Goldman Sachs recommended buying shares in Brazilian utilities such as Equatorial, Copel, Eletrobras, and Energisa, while advising to sell Cemig shares.
Investors should stay vigilant on these developments as they could influence market dynamics in the coming days.
Friday’s Morning Call: Brazilian Market Insights Before Opening
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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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