IBOVESPA Climbs Over Three Percent, Closes up for Seventh Straight Trading Session

RIO DE JANEIRO, BRAZIL – The Brazilian stock market closed up for the seventh straight trading session on Monday, June 8th, with investors optimistic about the rebound of the world’s leading economies. IBOVESPA, the main stock index, rose 3.18 percent and closed at 97,644.67 points – its highest level since March 6th.

In the market, expectations are growing that the impact of the coronavirus on economies will be lower than formerly expected, as economic data are better than projected. On Friday, June 5th, there was great euphoria after the United States reported growth in the labor market in May, while losses of another 8 million jobs were expected.

Over the weekend, Chinese exports for May also came out better than expected, standing only 3.3 percent below the same period last year, against expectations of a seven percent contraction.

“We are still feeling the reflexes of the preceding week. The projections are very wrong. The data has shown that, little by little, we are returning to activity,” said Gustavo Bertotti, economist at Messem Investments.

“It is possible to say with a reasonable degree of certainty that [the recession] should take less time and be less severe than was feared a few months ago,” Levante Investments analysts said in a report.

Alvaro Bandeira, chief economist of the modalmais digital bank, sees a trend for greater risk appetite building up in the world and believes that the stock market is the main entry point for resources that were allocated in fixed income.

“It has inflows from all sides. It has a pension fund having to risk a little more because the interest rate does not meet the actuarial target. There are managers who were betting on the dollar against the real and shifted positions. And there are the foreign investors, who are somehow coming back,” he said.

In the first three days of June, share purchases by foreign investors were R$1.786 billion (US$357 million) higher than sales, according to the B3 data.

However, the economist still sees a “complicated” domestic scenario, particularly on the political front, and believes that the recent highs have opened space for “a potential achievement of very strong short-term profit.

Abroad, the S&P 500 index in the US rose 1.2 percent and closed slightly above December 2019, reversing the year’s losses.

Highlights

On the stock exchange, companies in the airline sector have once again shown higher valuations. In this session, Azul and Gol shares once again led the BOVESPA’s gains, rising 29.25 and 28.29 percent, respectively. In addition to flight resumption programs, investors also reflected the agreement signed on Friday with workers in the sector, involving unpaid leave and a voluntary redundancy program. Since the start of last week, Gol’s shares have accumulated a 99.42 percent appreciation, while Azul’s shares have risen 91.53 percent.

The steel industries’ shares also showed strong valuations, against the backdrop of the rise in iron ore, which climbed over five percent, after Vale stopped mining operations in Itabira, reducing global supply. Among them, CSN and Usiminas’ shares performed best in the session, with respective increases of 17.12 and 7.97 percent.

Source: Exame