Ibovespa Holds Steady at 119,000 Points with Support from Major Banks and Vale

The Ibovespa index maintained its position above 119,000 points, buoyed by strong performances from major banks and Vale. This stability followed the release of inflation data from the United States, which eased market concerns.

On Tuesday, January 14, the Ibovespa closed up 0.25% at 119,298.67 points. Meanwhile, the dollar ended trading at R$ 6.0464, reflecting a decline of 0.85%.

Domestically, Finance Minister Fernando Haddad announced that President Luiz Inácio Lula da Silva will sign the Tax Reform this week, albeit with some vetoes.

Haddad indicated that the government plans to wait for the election of new leaders in the Chamber of Deputies and the Senate before proposing changes to the Income Tax. These elections are scheduled for February 1.

Haddad also confirmed that Lula directed the government to maintain income tax exemptions for individuals earning up to two minimum wages, or R$ 3,036, in the 2025 budget.

The Ibovespa’s rise can largely be attributed to gains from banks and Vale (VALE3), which propelled the index higher as trading approached its conclusion. Cyclical stocks experienced a brief uptick due to falling interbank deposit rates amid moderate inflation data from the United States.

Market Movements

Petz (PETZ3) emerged as a standout performer within the Ibovespa. The company’s strong performance was driven by expectations surrounding a potential merger with Cobasi by the end of March.

Analysts at Bank of America noted a possibility of a short squeeze, suggesting that investors betting against Petz may need to buy shares to cover their positions if the company’s sales strategy proves effective.

Conversely, CSN (CSNA3) recorded significant losses within the index. Shares of Petrobras (PETR4; PETR3) also reversed previous gains due to fluctuations in oil prices.

In the United States, Wall Street reacted to weaker-than-expected Producer Price Index (PPI) data. The PPI increased by only 0.2% in December after a 0.4% rise in November, falling short of economists’ predictions of a 0.3% increase.

Over the past year leading up to December, the PPI rose by 3.3%, compared to a 3.0% increase in November. Following this data release, market expectations for the Federal Reserve’s interest rate policy remained unchanged.

In addition, the CME Group’s FedWatch tool indicated a 97.3% probability that rates would stay between 4.25% and 4.50% during January’s meeting.

Investors now await tomorrow’s Consumer Price Index (CPI) report in the United States. Although not the Fed’s primary inflation measure, financial agents monitor CPI closely to adjust their price forecasts.

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