Welfare Vote: Brazil’s Ibovespa Closes at Record High; Dollar Drops to R$ 3.75

SÃO PAULO, BRAZIL – The Ibovespa stock index reached a new closing high this Wednesday, driven by the optimism in the market with the start of voting on the Social Welfare reform in the Chamber of Deputies plenary.

The index rose 1.23 percent to 105,817.06 points. As a result, it accumulated a rise of 20.4 percent in 2019. The session’s financial volume totaled R$21.5 (US$5.73) billion.

The market monitored the voting process on the Social Welfare reform’s main text in the Chamber of Deputies’ plenary session, which the government deems to be a key element for the rebalancing of the country’s public accounts.

Chamber president Rodrigo Maia (DEM-RJ) said the session should run until the early hours of Thursday to close the first round of voting. Maia’s forecast is that the second round will be finished by Friday.

“The market is valuing this approval,” said Felipe Silveira, investment analyst at Coinvalores, who also reaffirmed optimism that the second-round voting will be held before the parliamentary recess on July 18th.

Abroad, optimism also prevailed when on Wednesday, July 10th, Federal Reserve chairman Jerome Powell cleared the way for the first interest rate cut in the United States in a decade later this month, by pledging to “act accordingly” to defend the threats to economic expansion represented by trade disputes and global slowdown.

On Wall Street, the S&P 500 rose 0.45 percent.

The B3 session was also marked by an adjustment to the fluctuations of the Brazilian shares listed in New York, the ADRs, which were traded the day before when there was no trading on the São Paulo Stock Exchange due to a holiday in the State of São Paulo.

HIGHLIGHTS

• VALE rose 2.32 percent despite a ruling by the Minas Gerais courts that ordered the mining company to repair all the damage caused by the collapse of a tailings dam at the Córrego do Feijão mine in Brumadinho (MG) in January while maintaining an R$11 billion freeze on the company’s operational accounts;
• PETROBRAS PN went up 1.52 percent, in the wake of the sharp rise in oil prices in the foreign market;
• ULTRAPAR and BR DISTRIBUIDORA rose 5.84 percent and 4.52 percent, respectively, in the top end of the index. At the beginning of the week, Petrobras reduced the price of gasoline at the refinery to its lowest level since February;
• IRB BRASIL increased by 6.79 percent;
• BRASKEM lost 1.02 percent, ending a series of five trading sessions on the rise;
• KROTON fell 0.4 percent after five high trading sessions, a period in which it accumulated a 14.1 percent gain;
• ITAÚ UNIBANCO PN retreated 0.27 percent and BRADESCO PN yielded 0.46 percent.