O Ibovespa walked to embitter one more negative closure, until the letter published by the president Jair Bolsonaro (no party), adopting a conciliatory tone completely reversed the mood of the session. Even pressed for data from inflation higher than expected, the main local stock index was boosted by the easing of the first sign of cooling in political tension and climbed around 3,000 points in a few minutes.
The Ibovespa ended the day up 1.72%, at 115,360.86 points, a level far from the day’s lows, when it reached 112,435 points, down 0.86%. The aggregate financial volume traded on B3 today was R$39.09 billion.
The document signed by Bolsonaro signaled a retreat on the part of the president when indicating that, despite his differences with Minister Alexandre de Moraes, “the issues must be resolved by judicial measures that will be taken in order to ensure the observance of fundamental rights and guarantees provided for in Art 5 of the Federal Constitution”, he wrote.
“Bolsonaro knows that it needs to soften the tone of criticism in order, for example, to approve the postponement of court orders, because otherwise there would be no space to apply for the Bolsa Família”, stated the partner at Monte Bravo, Rodrigo Franchini.
“It was a white flag signal, which had to come from somewhere. And I think Bolsonaro felt that it was not possible to govern without having this ease of transit between the powers,” added the executive.
For the manager of Infinity Asset Fernando Siqueira, it was the first sign after a long time to try a dialogue with other powers. “With this, the more risky, more cyclical papers started to perform better and even Suzano, which is one of the most defensive names on the Stock Exchange, started to operate in decline,” he said.
Suzano ON shares closed down 0.54% and, together with Vale ON and Bradespar PN, which fell 0.38% and 0.36%, were the only companies on the Ibovespa to end the day on a high.
Other managers, who prefer to remain anonymous, point out that the signal is positive, but it is still necessary to monitor how long the president’s more conciliatory posture will be maintained.
In addition to the political tension, the day was also marked by new negative inflation surprises. The Extended National Consumer Price Index (IPCA) was 0.87% in August, above the median line of projections of 35 financial institutions and consulting firms, heard by Valor Data, of an advance of 0.70%. In 12 months, the IPCA was 9.68% in August, compared to 8.99% accumulated through July – the highest rate in 12 months since February 2016.
“Inflation came in higher than expected and the composition is not good. The peak of inflation should be in September, with inflation already in the double digits. By the end of the year, we have an inflation of 8%, but with a clear upward bias after today’s numbers,” said Gustavo Arruda, director of research for Latin America at BNP Paribas. “The Central Bank has a complicated situation ahead”, he summarizes.
With the surprise in inflation, market interest rates showed a significant increase throughout the session and put pressure on variable income assets.
“When you have an average interest rate for 2022 of 9.30%, 10.70% for 2023 and 11% for the following years, it is very difficult to bet on other asset classes. Our bet is that the risk premiums and the fear premiums in the interest curve are exaggerated. If this is true, the market tends to find a floor and recover by the end of the year”, says the investment director at Kilima Asset, Eduardo Levy, who ponders, however , that this also depends on a calmer political climate.