Index retreats 2% with worsening institutional tension in the country; Finds and United shoot By Reuters

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© Reuters. Operator tracks quotes on B3 in São Paulo 7/25/2019 REUTERS/Amanda Perobelli

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By Paula Arend Laier

SAO PAULO (Reuters) – The retreated 2% on the return of the holiday, with financial agents reflecting on this Wednesday potential developments of demonstrations in the country the day before and adjusting positions to the behavior of Wall Street on Tuesday, when there was no trading in the trading session Brazilian.

At 11:27, the Ibovespa fell 2.02%, to 115,487.31 points. The financial volume totaled 7.9 billion reais.

Thousands of people took to the streets of the country’s capitals on September 7 in acts called by President Jair Bolsonaro that had as their motto criticisms of the Supreme Court (STF), while the chief executive attacked court ministers and threatened to fail to comply with decisions.

Several political parties condemned Bolsonaro’s statements, with some vowing to monitor upcoming events to assess possible support for an impeachment lawsuit against the president.

{{news-914381||READ MORE: Shares: Ibovespa falls, even with a rise above 10% of Localiza and Unidas}}

In Eurasia Group’s view, the chances of an impeachment remain very low. The consultancy assessed that there was an increase in tensions and rhetoric, but that the factors for an increasingly polarized pre-election environment have not changed, nor has the institutional impasse that has characterized the last few months.

Market agents also assessed that the events of the day before should cost time, making it difficult to negotiate the agenda in Congress, such as tax and administrative reforms, in addition to hindering discussions on other topics, such as the question of precatories, among other consequences.

The Brazilian trading session still had as a backdrop the movement of Brazilian ADRs the day before, including the fall of Vale shares traded in New York, which corroborated adjustments in the stock exchange in this session, in addition to the weakness on Wall Street this Wednesday, with o yielding 0.1%.

HIGHLIGHTS

– LOCALIZA ON (SA:) and UNIDAS ON (SA:) soared by 8.8% and 8.5%, respectively, after the General Superintendence of the Administrative Council for Economic Defense (Cade) recommended the merger of the two companies with the adoption of drugs that mitigate competitive risks, which analysts considered milder than expected.

– VALE ON (SA:) retreated 2.1%, suffering from adjustments to the 1.9% decline in its ADR the day before in New York, in another session of decline in the mining and steel sector on the São Paulo stock exchange, with a new session of weakness in prices abroad. PNA USIMINES (SA:) gave 4.2%, with data from the Brazilian automotive industry also on the radar.

– ITAÚ UNIBANCO PN (SA:) lost 2.3% and BRADESCO PN (SA:) was down 3.4%, amid the most risk-averse environment in the Brazilian market, after demonstrations the day before corroborated prospects of demobilization of economic agendas. In the financial sector, B3 ON (SA:) gave 4.4%, also weighing on the Ibovespa.

PETROBRAS PN (SA:) registered a decrease of 2.4%, apart from the rise in foreign market prices, also suffering from the more tense climate in the local political-institutional scenario.

– EZTEC (SA:) ON fell 5.3%, with securities from construction companies contaminated by the upward movement of future long-term interest rates. CYRELA ON (SA:) lost 4.8, also among the biggest falls in the Ibovespa. The real estate sector index, which also includes shopping center securities, showed a decline of 2.9%.