Stock market rises 1.16% with the recovery of banks, and dollar retreats in the world with Fed less intense on the radar

Stock market rises 1.16% with the recovery of banks, and dollar retreats in the world with Fed less intense on the radar
Stock market rises 1.16% with the recovery of banks, and dollar retreats in the world with Fed less intense on the radar

The recovery of bank shares supported the recovery of the Ibovespa this Tuesday, the 24th. The main index of B3 rose 1.16%, to 113,028.15 points, even in the face of low oil prices, which dropped shares of the Petrobras. In addition to the financial sector, the strengthening of actions linked to consumption helped push the stock market higher, due to the generalized drop in future interest rates. The real also appreciated against the dollarwhich ended quoted at R$ 5.14.

Penalized in the last trading sessions for the risk surrounding their exposure to Americanas and for speeches by the president Luiz Inácio Lula da Silva (PT) on aid to neighboring countries through the BNDES, bank stocks ended higher. The expectation that the Justice will comply with some requests from institutions in the dispute with the retailer and the day without government statements supported the performance. And this Tuesday, the BNDES denied that there is demand to finance infrastructure service projects abroad.

B3, the São Paulo Stock Exchange Photograph: Werther Santana/Estadão

“There is a respite from government statements helping this movement, because yesterday was a complicated day, due to the news of a possible single currency and other statements”, says the variable income operator at Manchester Investimentos Guilherme Paulo. “As the Stock Exchange is heavily discounted in multiples, any lack of bad news is enough to recover a little.”

The dilution of fears led the financial sector index of B3 to close the day up 1.06%, with gains in shares of Santander (+3.11%), BTG Pactual (+1.20%), Bradesco (+ 1.12% ON, +1.07% PN) and Itaú Unibanco (+0.91%). In the opposite direction, Banco do Brasil yielded 0.50%. Earlier, Fitch Ratings said it does not intend to downgrade the sector’s ratings due to the Americanas case.

The spot dollar ended the session quoted at BRL 5.1427, down 1.10%, in line with the predominant sign of bearishness for the US currency abroad and the retreat of Treasury returns, amid the consolidation of the bet that The Federal Reserve (Fed, the US central bank) will slow the pace of interest rate hikes.

According to operators, once the stress with President Lula’s critical remarks on the Central Bank’s autonomy has passed, which led the currency to rise by almost 2% last week, agents are taking advantage of the mild environment abroad to adjust positions and take profits. There were also reports of foreign capital inflows to the Brazilian stock exchange, which would have many securities at attractive prices.

Aside from a one-off high at the opening of business, when the market assimilated the January IPCA-15 slightly above expectations, the dollar worked downwards throughout the session. The low, at R$5.1408 (-1.14%), was around 2 pm, precisely when the DXY index – which measures the dollar’s performance against six strong currencies – renewed the day’s low, below the line of 102,000 points, with losses against the yen and the euro, the latter benefiting from the prospect of further monetary tightening by the European Central Bank (ECB).

“We had statements from ECB members advocating higher interest rates in the euro zone. And the market awaits the Fed’s decision next week. All of this brings about a weakening of the dollar”, says the head of Foreign Exchange at Trace Finance, Evandro Caciano, adding that there was also selling pressure due to technical issues.

There is already a consensus on the perspective that the Fed will announce, on Wednesday of next week, February 1st, a rise in interest rates by 25 basis points, to a range between 4.50% and 4.75% – after the high of 50 points in December. As for bets that the rate will not go much beyond 5% and that it may start to be reduced later this year.

“The prospect that the Fed has a more moderate stance favors emerging currencies. The real stood out today due to a technical issue, since it had risen more in the last few days”, says economist Cristiane Quartaroli, from Banco Ourinvest, noting that “internally there is still a lot of caution” with the political and fiscal scenario.

In a report, Barclays states that the real tends to benefit from the positive external environment for emerging currencies. Domestic noises with a busy political agenda may, however, bring volatility and lead the Brazilian currency to underperform its peers in the coming weeks.

“We expect the real to move in line with our constructive view for emerging exchange rates, especially while they benefit from a high carry and expectations for interest rate cuts are postponed,” says Barclays strategists.

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The bank lists three factors that could harm the real’s performance in the coming weeks: the election for the Presidency of the House and Senate, on February 1st; the choice of substitutes for the directors of the Central Bank Bruno Serra and Paulo Souza, whose mandates end on February 28, in the midst of Lula’s criticism of the autarchy; and the discussion about the government’s fiscal policy.

The article is in Portuguese

Tags: Stock market rises recovery banks dollar retreats world Fed intense radar

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