Stock exchange accumulates loss and dollar rises with suspicion about Bolsonaro’s retreat – 09/10/2021 – Market

The Ibovespa, the main index of the Brazilian Stock Exchange, closed this Friday (10) down 0.93%, to 114,285 points, accumulating a weekly retreat of 2.26%. The dollar rose 0.76% and ended the day quoted at R$ 5.2670. In the week, the American currency advanced 1.58%.

For analysts, the results of this Friday reflect investors’ aversion to risk motivated by the negative performance of the market in the United States and also by the distrust of President Jair Bolsonaro’s (non-party) commitment to adopt a conciliatory posture expressed in a letter released this Thursday (9).

“The market continues in a cautious tone because it is not possible to know what Bolsonaro’s next steps will be, whether he will maintain the posture expressed in the letter, or whether he will return to the discourse of demonstrations,” says Fernanda Consorte, chief economist at Valor Investimento.

For Consorte, Bolsonaro’s letter is not enough to interrupt the devaluation trend due to the accumulation of negative factors, such as the institutional crisis, high inflation and downward revisions of economic growth.

“This generates risk aversion for Brazil. Today we had a scenario of stable emerging currencies and, once again, we were the ugly duckling”, he says.

In the United States, Dow Jones, S&P 500 and Nasdaq retreated 0.78% 0.77% and 0.87% this Friday, respectively, under the impact of the higher-than-expected result of inflation to the American producer, according to Rafael Ribeiro, an analyst at Clear Broker.

“The PPI [Índice de Preços ao Produtor] rose 0.7% in August compared to July, while the market expected 0.6%”, explains Ribeiro.

The results of the American indexes helped the Brazilian stock market to close in the red, according to Romero Oliveira, head of variable income at Valor Investimentos.

“In the middle of the afternoon, the international market accelerated its fall and the Brazilian stock exchange ended up going along with it”, says Oliveira. “In addition, some statements by President Jair Bolsonaro throughout the day also had a negative impact.”

Amid a series of criticisms from supporters over the release of the note seeking to ease tensions with the Supreme Court, Bolsonaro said on Friday that he has not backed down from anything and has never made a mistake.

The domestic market was impacted this week mainly by the coup-rooted acts promoted by the president during the September 7 holiday and by the official note calling for conciliation, released two days later.

On Thursday (9), the Ibovespa closed the day at 115,360.86 points, up 1.72%, a result that reversed a downward trend that had been sustained until the end of the afternoon, when the note was released. official in which Bolsonaro states that he “never had any intention of attacking any of the Powers”.

At 4:30 pm, the index was operating at 112,621 points, signaling that it would end with a drop of around 0.5%. After the letter was released, however, the Stock Exchange started to trade in high and, at 4:45 pm, it was already at 116,353.62 points, the highest of the day — a 3.3% jump in just 15 minutes.

In the letter, written with the help of former president Michel Temer (MDB), Bolsonaro attributes his earlier “hard-hitting” words to the “heat of the moment.”

The note managed to reverse part of the losses recorded on Wednesday (8), when the main index of the B3 sank 3.78%, to 113,413 points, in the wake of the president’s attacks on the STF made in the demonstrations on September 7th.

The fall was accentuated after the president of the Supreme Court, Luiz Fux, affirmed that, if Bolsonaro fulfilled the threat of defying court decisions of Minister Alexandre de Moraes, he would be committing a crime of responsibility.

At the time, the market considered that the clash would put an end to negotiations with the Congress for the advancement of reforms and, mainly, between the Executive and the Judiciary for the modulation of the payment of court orders in 2022, whose amount of R$ 89 billion is evaluated as a potential risk to the country’s fiscal results.