Demonstrations, holidays in the US, IPCA and ECB meeting: what to monitor this week

SAO PAULO – After a very troubled turn of the month, investors will have a few days to rest, which does not mean that the business environment will be calmer.

The next few days will feature two holidays, the first in the United States, this Monday (6) when Labor Day is celebrated, which will leave Wall Street closed, which should significantly reduce the liquidity of business in Brazil.

The second should also be more empty around here because on Tuesday (7) is the country’s Independence holiday, which will make B3 have no operations. On the other hand, it is always important for investors to pay attention to the ADRs of Brazilian companies traded in New York, which may give an indication of the reopening of the Stock Exchange on Wednesday.

However, this time another factor may make the market have a more “unpredictable” movement: the demonstrations scheduled for September 7th.

The events draw attention amidst the climate of institutional tension aggravated in recent weeks by clashes between President Jair Bolsonaro and the Supreme Court (STF). On Friday, Bolsonaro said September 7 would be an ultimatum for two Supreme Court people, without naming names.

“If anyone wants to play outside the four lines of the Constitution, we will show that we can play too,” he said. There is also tension over possible meetings between pro-government groups and the government, which could lead to confusion.

In the political field, in the coming days the bill that changes the Income Tax rules should be sent to the Senate after having its approval in the Chamber last Thursday. According to several newspapers, the president of the Senate, Rodrigo Pacheco, is resisting the bill, which is also criticized by the States for fear of loss of revenue.

Indicator schedule

On the indicators side, the week will be quieter, mainly due to the holidays. In Brazil, the main highlight is the Broad Consumer Price Index (IPCA), released by the Brazilian Institute of Geography and Statistics (IBGE) on Thursday (9).

For Bradesco’s analysis team, inflation is expected to rise by 0.69% in August. “We believe that August and September should represent the peak of price increases in this metric and that, from then on, the decompression of commodities and industrial goods will add to the effects of the adjustment in monetary policy, favoring the deceleration of inflation”, assess the analysts.

The week will also feature the General Price Index – Internal Availability (IGP-DI), on Wednesday (8), in addition to retail sales data, on Friday (10).

Abroad, given the weaker agenda, attention will focus on the Eurozone. On Tuesday, the final reading of the Gross Domestic Product (GDP) for the second quarter will be known, while on Thursday there will be the monetary policy meeting of the European Central Bank (ECB).

Finally, there is also the release of the Beige Book in the United States, on Wednesday, which should help measure the temperature of the largest economy and its pace of recovery.

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