Ibovespa renews six-month low with fiscal risk and commodity decline By Reuters


© Reuters. Soybean loading in Porto Nacional, Tocantins 3/24/2018 REUTERS/Roberto Samora

By Paula Arend Laier

SAO PAULO (Reuters) – The hit the fourth consecutive fall, working below 112,000 points, pressured by the still complicated domestic scenario, but also by the unfavorable external environment, especially the fall in commodities.

At 11:33 am, the Ibovespa fell 1.89%, to 111,641.87 points, the low of the session so far and the lowest intraday level since March 25th. With such performance, it was heading for the third consecutive weekly loss, with a decrease of more than 2%.

The financial volume totaled 9.5 billion reais, with the session still marked by the expiration of stock options, which usually have among the most liquid series papers with relevant weight on the Ibovespa.

For Genial Investimentos, assets in Brazil are reacting to the risk of disrespecting the spending ceiling, amid the government’s unpredictability, uncertainty about the outcome of the question of precatories and what the cost of Auxílio Brasil will be.

“While doubt regarding the spending ceiling is hanging over the Brazilian economy, investors will continue to price high fiscal risk, which means falling asset prices in the markets.”

Trading on the São Paulo stock exchange still has the backdrop of worsening prospects for growth in the Brazilian economy, high inflation and higher interest rates, as well as a water crisis.

On Wall Street, the negative sign also prevailed, with tech stocks among the biggest pressures, as well as fears about possible increases in corporate taxation and caution ahead of the Federal Reserve’s decision next week.

HIGHLIGHTS

– VALE ON (SA:) fell 3.1%, with the fall of futures in China overshadowing the announcement of a dividend of 8.1 reais per share by the mining company the day before. In addition, UBS cut Vale’s recommendation for ‘sale’ with the prospect of a surplus of iron ore in the world.

– GERDAU PN (SA:) registered a fall of 4.9%, in another session of losses in the sector, against the backdrop of the fall in steel raw material prices, with China evaluating including more cities under its controls environmental issues. PNA USIMINES (SA:) was down 4.7% and CSN ON (SA:) showed a decline of 3.7%.

PETROBRAS PN (SA:) retreated 3.5%, affected by the weakness of prices in the foreign market, but also the return of noise involving fuel prices.

– BRADESCO PN (SA:) and ITAÚ UNIBANCO PN (SA:) lost 1% and 0.9%, respectively, also affected by uncertainties in the Brazilian scenario. For Goldman Sachs, the increase in the IOF decreed by the government the day before is not expected to significantly affect banks’ profits, but it may have a small negative impact on the demand for financial services.

– EQUATORIAL ON (SA:) rose 0.8%, among the few increases in the Ibovespa in this session, with the electricity and public utility sectors showing a less negative performance. SABESP ON (SA:) advanced 0.6%.

– LOG-IN (SA:) ON, which is not on the Ibovespa, appreciated by 8.3%, expanding the strong gains on Thursday. Earlier, the company said that Alaska Investimentos, its largest shareholder, accepted the terms of the offer, announced the day before, to be launched in the future by MSC Mediterranean Shipping Company to buy control of the company.