Ibovespa Achieves Ninth Straight Rise Amid U.S. Economic Shifts

Once again, Ibovespa has matched its 2018 record with nine consecutive rises. Today, the index climbed 0.85%, reaching 128,293.61 points—an impressive growth over its previous close.

Six years ago, it soared nearly 7,000 points during a similar period. This rally added about five thousand points to Brazil’s key stock index.

Remarkably, today’s closing is the highest since May 17, when it settled at 128,150.71 points, reflecting a slight downturn.

However, the Brazilian real didn’t echo the market’s optimism, appreciating by 0.56% to R$ 5.44.

The DXY, which tracks the U.S. dollar against major currencies, dipped by 0.56%. Similarly, Brazil’s future interest rates fell across the board.

In the U.S., the Consumer Price Index (CPI) for June signaled deflation and a slowdown in the core CPI.

This reignited hopes for a Federal Reserve rate cut, potentially as early as September, bouncing back from earlier concerns over rising prices.

Economist Francisco Nobre from XP suggested that the CPI’s gentle rise for both goods and services might indicate a cooling off from early-year inflation spikes.

“Crucial third-quarter data will show if this calm is here to stay,” he noted.

Mary Daly, President of the Federal Reserve of San Francisco, pointed out that recent data could soon justify monetary policy tweaks.

Though the timing remains up in the air, the implications are significant.

Economic Insights from Brazil:

Christian Iarussi, a partner at The Hill Capital, explained that positive CPI findings are lifting market expectations of a U.S. rate decrease.

This optimism is also spilling over to Brazil, promoting a more favorable investment climate.

Meanwhile, Brazil’s retail sector reported a 1.2% rise in May from April, marking its fifth month of consecutive growth.

Cristiano Santos from IBGE highlighted that this growth spanned across most sectors, including supermarkets and pharmacies.

Rodolfo Margato, another XP economist, linked retail boosts to an upswing in family incomes.

With unemployment at a ten-year low and wages rising faster than inflation, families are feeling more prosperous. XP anticipates a 6% real increase in family incomes by 2024.

Despite minor losses from Vale, Ibovespa’s growth was mainly fueled by retail sector advancements and rising global oil prices, which favored Petrobras with a 0.68% increase.

This sequence of positive market trends points to an increasingly resilient economic landscape, which is promising for both domestic and international investors.

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