Ibovespa Falls Below 123,000 Ahead of Corpus Christi Holiday

The Brazilian stock market, Ibovespa, fell 0.87% today, closing at 122,707 points. This drop marked the lowest level for Ibovespa in 2024.

The US dollar rose 1.07% to R$ 5.20. Futures interest rates climbed consistently. Wall Street’s declines, especially in the tech sector, impacted São Paulo.

The Federal Reserve’s Beige Book reported steady economic expansion from early April to mid-May. However, growth varied across industries and districts.

Most districts saw slight to modest growth. Two reported no change. Anderson Silva of GT Capital suggested the data implies limited interest rate cuts in the US in 2024.

Markets remain cautious ahead of US GDP and PCE inflation data releases. The Ibovespa dropped despite mixed data due to the upcoming Corpus Christi holiday.

Investors adopted defensive positions to avoid surprises from these reports.

Brazil’s labor market showed positive signs. The unemployment rate stood at 7.5% for the quarter ending April 2024, down from 7.6% in January. This is the lowest rate since April 2014.

The workforce reached 100.8 million, a 2.8% annual increase, adding 2.8 million jobs. Brazil created 240,033 formal jobs in April, surpassing the forecast of 216,900 jobs.

Economist Igor Cadilhac noted the labor market‘s resilience. The market has reached its lowest seasonal level since November 2014.

Improved participation and employment rates in April reflect this trend. These figures suggest a robust labor market, which may slow the pace of Selic rate cuts by Brazil’s Central Bank.

President Lula hopes for cooperation from Central Bank President Roberto Campos Neto to reduce interest rates. Lula emphasized the government’s commitment to lowering the Selic rate.

However, rising rice prices and a higher gross debt-to-GDP ratio of 76.0% in April complicate the fiscal outlook.

Market Snapshot

Market actions reflected defensive strategies. Vale dropped 1.02%, following a 2.16% decline yesterday, due to falling iron ore prices in China.

Banks like Bradesco and Itaú Unibanco also fell. Banco do Brasil remained flat but highly traded.

Petrobras dipped 0.13% as international oil prices fell. Analysts debated the potential merger benefits between Azul and Gol. Azul dropped 3.63%, and Gol plummeted 10.16%.

Yduqs fell 3.75% due to a downgrade, while Lojas Renner rose 1.21% with a buy recommendation. Grupo Mateus surged 4.53% on a potential acquisition.

Retailers saw significant movement after Brazil’s Parliament approved taxes on international online purchases.

This benefits local clothing retailers like Lojas Renner, Guararapes, and C&A. The new tax levels the fiscal playing field after ten months of imbalance favoring foreign goods under $50.

With no trading tomorrow due to the holiday, markets brace for the PCE report on Friday.

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.