São Paulo stock exchange index remains stable despite Vale and Petrobras’ fall (August 9)

RIO DE JANEIRO, BRAZIL – The São Paulo stock exchange increased by a slight 0.17% this Monday. Its Ibovespa index, the benchmark of the trading floor, closed at 123,019 points, despite the fall of Vale and Petrobras shares, the two biggest stocks of the market.

The week’s first session was marked by strong volatility, which led the exchange to oscillate between gains and losses for a good part of the day.

The drop in crude oil and iron ore prices put negative pressure on the commodities sector, although the Ibovespa weathered the storm and managed to stay at last week’s closing.

The ordinary and preferred shares of the state-owned oil company Petrobras fell by 0.93% and 0.70%, respectively, while the shares of the mining giant Vale fell by 0.63%. The shares of both companies were also the most traded in Monday’s session.

On the other hand, economic operators remain attentive to the definition of the amounts of the new social assistance program presented by Jair Bolsonaro’s government, which intends to replace the current Bolsa Familia, in force since 2003.

The President submitted to Congress the proposal, which does not clarify how many people will be the beneficiaries, nor the amount of these subsidies.

In parallel to this initiative, Bolsonaro submitted to Parliament a bill that proposes to extend by 10 years the deadlines for the federal government to pay about R$90 (US$17) billion accumulated in judicial debts to private parties.

Financial agents view both measures with suspicion, as they fear an even greater gap in the country’s already fragile public accounts.

The US dollar appreciated by 0.23% against the real and closed at 5.24 reais for purchase and sale at the Brazilian commercial exchange rate in the foreign exchange market.

Leading the gains on the Ibovespa were the shares of meat company Minerva (4.00%),  investment bank BTG Pactual (3.92%), paper company Suzano (3.81%), and fuel distributor Ultrapar (3.80%).

In addition to Petrobras and Vale, other stocks ending down were the shopping mall operator JHSF (-2.20%), the state-owned group Eletrobras (-1.89%), and retail chain Lojas Americanas (-1.79%).

The volume traded in the session reached R$25.4 (US$4.85) billion), in a total of 3,457,203 financial operations.