Ibovespa Inches Higher Despite Commodities Slump

In Thursday’s trading session, the primary index of Brazil’s stock market, the Ibovespa, recorded a modest gain of 0.28%, closing at 136,492.22 points.

This slight uptick followed the previous day’s positive momentum, despite a mixed performance on Wall Street and a downturn in commodity prices.

The Brazilian real also strengthened against the dollar, which closed the session at 5.5711 reais, marking a decline of 1.22%.

Domestically, the spotlight was on the economic data released and comments from President Luiz Inácio Lula da Silva.

Highlighting the day’s developments was the National Treasury’s report, which revealed a primary deficit of 9.283 billion reais for July.

This figure shows a significant improvement from the 35.921 billion reais deficit recorded in the same month last year. For the year to date, the central government’s cumulative primary deficit stands at 77.858 billion reais.

Over a 12-month period, the deficit totals 233.3 billion reais, equivalent to 2.04% of Brazil’s Gross Domestic Product (GDP).

In international trade, Brazil’s trade balance for the month reported a surplus of $4.828 billion. This represents a sharp 49.9% decrease from the previous year’s positive results.

The data is sourced from the Ministry of Development, Industry, Commerce, and Services (MDIC). This outcome fell below the expectations of economists, who had anticipated a surplus of $6.1 billion.

On a different note, President Lula indicated that a settlement might be reached by early October with Samarco and its partners, Vale and BHP, for damages related to the 2015 Mariana dam failure.

Stock Market Movements

In the stock market, Light (LIGT3) saw a dramatic rise of nearly 40%, following the postponement of a creditors’ meeting concerning the company’s overseas debt.

Leading the gains in the Ibovespa, IRB Brasil RE (IRBR3) surged over 5%, rebounding from its previous session’s losses. Cyclical stocks followed the upward trend, boosted by a flattening of the U.S. Treasury yield curve.

This flattening reflects growing expectations for a cut in U.S. interest rates in September. Among the top performers were Natura (NTCO3) and Lojas Renner (LREN3).

Conversely, Azul (AZUL4) shares declined after BlackRock reduced its stake in the airline to approximately 4.7%. Despite the fall in iron ore prices, Vale (VALE3) managed a near 1% gain.

In the U.S., the job market showed signs of cooling, with the ADP report indicating only 99,000 new jobs in August, the fewest in over three years and well below market expectations.

Unemployment claims also dropped slightly, coming in at 227,000 for the week ending on August 31. Financial markets are now adjusting their expectations for U.S. Federal Reserve rate cuts, with a 55% probability of a 25 basis-point reduction.

As the week progresses, investors are keenly awaiting further labor market data, especially the U.S. government’s official employment report due on Friday, which is predicted to show the creation of 160,000 jobs in August.

In New York, the major indices closed mixed, with the Nasdaq managing a slight gain, driven by a rebound in Nvidia shares, while the S&P 500 and Dow Jones experienced declines.

This nuanced performance underscores the complex interplay of factors currently influencing global financial markets.

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