US futures rise on focus on inflation and Fed outlook; IPCA, Copom minutes and more market issues today

New York index futures rise, while Asian and European stock markets operate without a defined direction on Tuesday (9), with investors looking for new clues to assess the pace of monetary tightening by the US Federal Reserve (Fed).

The July consumer price index (CPI), due tomorrow, is expected to provide some clarity on the path of the Fed’s interest rate hikes as it works to contain the inflation, or at least slow it down. In the average of the projections of the Refinitiv consensus, the CPI of registering advance of 0.2% in July, in comparison with June.

The US market is also awaiting another batch of corporate results today. Workhorse, Capri Holdings and Ralph Lauren are expected to report quarterly results ahead of the opening. Coinbase, Spirit Airlines, Roblox, Sweetgreen and EVgo will report after the market closes.

In Brazil, the Extended Consumer Price Index (IPCA) for July should have the first deflation in 26 months and the biggest contraction since the Real plan. The average of Refinitiv forecasts points to a negative IPCA of 0.65% in July compared to May.

In addition to the IPCA, this morning the domestic agenda included the release of the minutes of the last meeting of the Central Bank’s Monetary Policy Committee (Copom), when interest rates rose by 0.5 point, to 13.75% per year. The document reinforced the assessment that the Copom will assess the need for residual adjustment, of lesser magnitude, at the next meeting.

“It was pointed out that the current monetary tightening cycle was quite intense and timely and that, due to the long and variable lags of monetary policy, a large part of the expected contractionary effect, as well as its impact on current inflation, is still not observed”, he pointed out. the document.

At night, Log-In (LOGN3), CVC (CVCB3), Copel (CPLE6), XP (XPBR31) and more companies release their balance sheets after the markets close.

1. World Scholarships

United States

US futures indexes operate with slight gains on Tuesday (9), as investors wait for more corporate results and inflation data that will determine the pace of future interest rate hikes in the country.

Investors are trying to gauge the pace of the Federal Reserve’s monetary policy tightening efforts. A surprisingly strong US jobs report last week appeared to reduce the likelihood of a recession, allowing the central bank the capacity for more aggressive rate hikes as it tries to contain inflation.

As such, the latest consumer price index (CPI) reading for July, due out Wednesday, should shed some light on the pace of the Fed’s interest rate hikes as it works to contain inflation, or at least less slow it down.

See the performance of futures markets:

  • Dow Jones Futures (USA), +0.15%
  • S&P 500 Futures (US), +0.14%
  • Nasdaq Futures (US), +0.07%

Asia

Asian markets closed with no clear direction on a quiet day for indicators, as markets continued to digest last week’s US jobs report.

Singapore and Indian markets are closed for a public holiday on Tuesday.

China’s ongoing military exercises around Taiwan have not had much of an impact on markets, according to Tapas Strickland, an economist at National Australia Bank.

  • Shanghai SE (China), +0.32%
  • Nikkei (Japan), -0.88%
  • Hang Seng Index (Hong Kong), -0.21%
  • Kospi (South Korea), +0.42%

Europe

European markets operate in no clear direction with the focus on global markets turning to an important US inflation reading on Wednesday.

The balance sheet crop also continues to be a key factor in individual European stock price movements, with Abrdn, IHG, L&G, Continental and Munich Re among those reporting ahead of markets opening.

On the economic front, UK retail sales rose 1.6% in July, boosted by a heat wave and sales of warm weather clothing, picnic items and electric fans, according to a report by the British Retail Consortium.

  • FTSE 100 (UK), +0.08%
  • DAX (Germany), -0.48%
  • CAC 40 (France), +0.01%
  • FTSE MIB (Italy), -0.11%

commodities

Oil prices tumbled on Tuesday on the latest progress in talks to revive the 2015 nuclear deal with Iran, which would pave the way for boosting its oil exports in a tight market.

The European Union on Monday presented a “final” text to revive the 2015 nuclear deal with Iran, awaiting approvals from Washington and Tehran.

  • WTI Oil, -1.49% at $89.41 a barrel
  • Brent crude, -1.21% at $95.48 a barrel
  • Iron ore traded on the Dalian Exchange was down 1.36% to 723.00 yuan, equivalent to US$107.07

Bitcoin

  • Bitcoin, -1.44% to $23,789.54 (from 24 hours ago)

2. Schedule

After following another rise in the Selic rate, to the highest level in five years, investors are looking carefully at the minutes of the meeting in which the decision was taken. The minutes of the last meeting of the Central Bank’s Monetary Policy Committee (Copom) were released this Tuesday (9), at 8 am.

The document reinforced the assessment that the Copom will assess the need for residual adjustment, of lesser magnitude, at the next meeting.

“It was pointed out that the current monetary tightening cycle was quite intense and timely and that, due to the long and variable lags of monetary policy, a large part of the expected contractionary effect, as well as its impact on current inflation, is still not observed”, he pointed out. the document.

The Broad Consumer Price Index (IPCA) for the month of July is also released this Tuesday morning (9) and should present its first deflation in more than two years. The last time the index registered negative monthly variation was in May 2020, at the height of restrictions and distancing rules due to the Covid-19 pandemic.

The projections of market agents consulted by Refinitiv vary between deflation of 0.3% and 0.8%. The average of forecasts points to a negative IPCA of 0.65% in July compared to May. If confirmed, the index will have the biggest deflation of the historical series started with the Real plan, in 1994.

A deflation of 0.65% also implies a deceleration of the IPCA in 12 months, from 11.89% to 10.10%.

Overseas, the price indices of China and Japan are released this Tuesday (9) evening.

Brazil

8:00 am: Copom Minutes

9:00 am: IPCA for July, with a projection by the Refinitiv consensus of a drop of 0.65% compared to June and an increase of 10.10% on an annual basis

10 am: BC President Roberto Campos Neto has a meeting with the president of Shell Brasil (closed to the press)

USA

9:30 am: Quarterly non-agricultural sector productivity change

17:30: Oil Stocks – API

3. Goal forpublic life

The Ministry of Economy is designing a target model for public debt with an up or down fluctuation band, inspired by the inflation targeting system used by the Central Bank, according to the Estadão. One of the proposals tested is a target for debt between 60% and 70% of GDP, with a margin of tolerance of plus or minus 5 pp.

Depending on the debt level and its trajectory, the band system would make it possible to increase expenses above inflation, provided that the continued decline in indebtedness is guaranteed. If the debt is rising, the government would have to go back to correcting expenditures more quickly. The model is part of the PEC regulation approved in March last year to guarantee the extension of emergency aid.

Treasury technicians hope to present this month to Paulo Guedes the proposal for a new framework for fiscal policy, according to Valor. The design maintains the cost ceiling, adding some mechanisms to make it more flexible.

TSE excludes Defense technician from inspection of voting systems

The president of the Superior Electoral Court (TSE), Minister Edson Fachin, sent this Tuesday (8) a letter to the Ministry of Defense announcing that he had discredited an Army colonel from the team of technicians designated by the ministry to inspect the source codes of the electronic voting machine. and the entire electronic voting system.

The official letter is also signed by the current vice president of the TSE, Minister Alexandre de Moraes. The reason for vetoing Colonel Ricardo Sant’Anna’s participation in the inspection was the news that messages published by him about the electoral process were labeled as false by social network platforms.

4. Covid

Last Monday (8), Brazil recorded 188 deaths and 19,193 cases of covid-19 in 24 hours, according to information from the consortium of press vehicles, at 20:00.

The moving average of Covid deaths in 7 days in Brazil stood at 207, a reduction of 11% compared to the level of 14 days earlier.

The moving average of new cases in seven days was 25,407, which represents a decrease of 32% compared to the level of 14 days before.

The number of people fully immunized against Covid in Brazil reached 169,318,225, equivalent to 78.82% of the population.

The number of people who took at least the first dose of vaccines reached 180,138,644 people, which represents 8.85% of the population.

The booster dose was given to 101,823,074 people, or 47.4% of the population.

5. Corporate Radar

Itaú (ITUB4) recorded managerial recurring income of R$7.679 billion in the second quarter of 2022 (2Q22), 17.4% higher than that recorded in the same period in 2021, according to the largest private bank in Brazil.

For the bank, the Refinitiv consensus pointed to an expected profit of BRL 7.487 billion.

Saint Martin (SMTO3)

São Martinho (SMTO3) recorded net income of R$ 221.6 million in the first quarter of the 2022/2023 harvest (1Q23), 16.6% higher than that reported in the same stage of 2022.

Recurring earnings before interest, taxes, depreciation and amortization (Ebitda) grew 27.2% in 1Q23, totaling R$875.7 million.

PetroRio (PRIO3)

PetroRio (PRIO3) reported an increase in daily production in July of 45.91%. The company produced in July, counting the 95% of Polvo + TBMT and the 10% of Manati 46,824 barrels of oil equivalent per day (boepd), compared to 32,090 boepd in June. The July mark is the highest of the year so far.

Total sales fell from 1.566 million barrels in June to 993.687 thousand in July.

Multiplan (MULT3)

Multiplan (MULT3) announced that it will be responsible for managing Parque Shopping Maceió, for a period of 5 years, starting on January 1, 2023. Currently, the project is managed by Aliansce Sonae (ALSO3). The shareholding structure, which has Multiplan and Aliansce Sonae each holding 50% interest, will not be changed.

AES Brazil (AESB3)

AES Brasil (AESB3) entered into a Share Purchase and Sale Agreement with Cubico Brasil, referring to the acquisition of all the shares representing the capital stock of the special purpose companies that make up the Ventos do Araripe, Caetés and Cassino Wind Complex. “Completion of the operation will be subject to compliance with the conditions precedent agreed under the contract”, he informs.

The total asset value (enterprise value) is up to R$2.033 billion, of which R$1.105 billion is equity; and assumption of net debt of R$928 million. Thus, AES Brasil will have an installed capacity of 5.2 GW renewable, with 4.2 GW operational and 1.0 GW under construction.

(With Estadão, Reuters and Agência Brasil)

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About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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