Ibovespa Holds Steady as Markets Await Fiscal Package

The Brazilian stock market showed resilience on Monday, November 25, 2024, as the Ibovespa index maintained its position above 129,000 points.

Investors remained cautious, awaiting news on the government’s fiscal package. Meanwhile, the US markets provided support, with the Dow Jones reaching a new closing record.

The Ibovespa closed at 129,036.10 points, a slight decrease of 0.07%. This minor dip came after the index had achieved significant gains in the previous week.

The US dollar weakened against the Brazilian real, ending the session at R$ 5.8055, down 0.15%. Investors closely monitored discussions about public spending cuts.

President Luiz Inácio Lula da Silva met with key ministers to discuss the fiscal plan. The meeting included the Chief of Staff, Finance Minister, and other high-ranking officials.

However, no announcements were made following the discussions. Later in the day, the Planning and Finance Ministries scheduled a press conference to address the Bimonthly Revenue and Expenditure Evaluation Report.

Economic Shifts and Market Reactions

This report, released on Friday, November 22, outlined an additional R$ 6 billion in budget cuts for the current year. Economists surveyed by the Central Bank revised their inflation forecast for 2024 downward from 4.64% to 4.63%.

However, they increased projections for subsequent years, according to the Focus Bulletin. Azul (AZUL4) led the gains, surging over 10%. This increase was attributed to the weakening dollar and falling oil prices.

CVC (CVCB3) also saw significant growth, reaching its highest price since March. The company’s board approved a poison pill provision and a share buyback program.

Carrefour (CRFB3) faced challenges due to a boycott by Brazilian meatpackers. This action came in response to the French retailer’s decision to stop selling Mercosur products.

Analysts estimate that beef accounts for 4-5% of Carrefour’s total sales. Bradesco (BBDC4) experienced a decline after JP Morgan downgraded its recommendation from buy to neutral.

The American bank also reduced its target price for Bradesco shares. In the United States, investors reacted to President-elect Donald Trump’s cabinet nominations.

The appointment of Scott Bessent as Treasury Secretary was seen as a positive sign for fiscal conservatism. Reports of a ceasefire between Israel and Hezbollah also influenced market sentiment, albeit to a lesser extent.

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