By Paula Arend Laier
SAO PAULO (Reuters) – The Ibovespa closed on a high this Friday, ensuring a positive performance this week, endorsed by comments by the Federal Reserve chair, which for now ruled out the risks of the US central bank starting to reduce stimulus to the US economy earlier than anticipated.
Speaking at the Jackson Hole symposium, Jerome Powell said the US economy continues to progress towards the conditions set by the Fed to scale back its pandemic-era emergency programs, but has not pointed to the time for any effective change in monetary policy beyond “ this year”.
He signaled that the Fed will remain cautious in any eventual decision to raise interest rates as it tries to bring the economy back to full employment, saying it wants to avoid reining in “transient” inflation and potentially discouraging job growth in the process.
On the Fed’s potentially imminent decision to begin reducing its monthly asset purchases, Powell said he agreed with most of his colleagues that a tightening might be appropriate “this year.”
In the view of Bradesco’s Economics department, Powell reinforced the strategy of beginning to normalize US monetary policy, with a moderate tone in relation to inflation (recognizing disinflationary forces) and the labor market, indicating that measures will not be taken now.
“Perhaps more important than the tapering start date will be the speed at which the Fed reduces its purchases, which should be gradual and decoupled from interest rate adjustments,” he added.
The performance of the Ibovespa during the week also reflected the search for bargains, after the index accumulated until last Friday a decline of around 3% in August, contaminated by political-institutional tension and the perception of increased fiscal risks, as well as concerns about the inflation and the water crisis in the country.
In the view of the variable income manager at Western Asset, Cesar Mikail, the Brazilian market is still well discounted in relation to the rest of the world, a behavior that he attributes in large part to the political noise in the country.
While the Ibovespa still accumulates decline in the month, the North American S&P 500 rises 2.6%, having renewed historic highs this week.
“There is still a fog that cannot be ignored in the political and fiscal environment,” said the leader of the Blue3 variable income table, Antonio Pedrolin, noting, however, that there are more recent signs seeking to alleviate some concerns that have negatively affected the stock exchange São Paulo.
He cited as an example statements by the president of the Chamber of Deputies, reiterating that the spending ceiling will not be broken to pay for Auxílio Brasil, a social program that the government of President Jair Bolsonaro intends to create to replace Bolsa Família, or for another reason.
And the president of the Central Bank, Roberto Campos Neto, reinforced that there is a detachment between the perception of investors and the advances that have taken place in Brazil, including in the fiscal area, and defended that the country needs to communicate efficiently in order to gain credibility.
After the previous week ended on a very heavy tone, with political uncertainties and doubts about the country’s medium and long-term fiscal trajectory, there was a battalion of declarations minimizing this fiscal risk, highlighted the investment director of BS2 Asset, Mauro Office.
This, he assessed, was added to an improvement abroad, with a reduction in uncertainties from Powell’s statements, endorsing an improvement in Brazilian assets in general.
This Friday, the Ibovespa rose 1.65%, to 120,677.60 points, accumulating an increase of 2.22% in the week. In August, it still retreats 0.92%, but in the year it rises 1.4%.
The Small Caps index rose 1.72% to 2,917.13 points, up 2.9% on the week, but down 1.53% on the month. In 2021, it rises 3.36%.
The volume traded in this session totaled 23.7 billion reais.
HIGHLIGHTS OF IBOVESPA IN THE YTD OF THE MONTH:
– EMBRAER ON rises 27.38%, strengthened by the first recurring quarterly profit in more than three years released in August and expectations to continue advancing its results and doubling its revenues in the medium term. The aircraft maker also announced new deals involving its urban air mobility subsidiary Eve.
– CPFL ENERGIA ON advances 14.49%, still supported by the jump of 143.6% in the second quarter’s profit, to 1.126 billion reais, amid the resumption of electricity consumption, despite the recent increase in concerns about the water crisis .
– SUZANO ON appreciated 14.48%, supported by analysts’ perceptions that the worst may have been left behind in terms of pressure on pulp prices. Rival KLABIN UNIT rises 9.24%.
– CSN ON loses 17.66%, with the mining and steel sector showing negative performance in August, amid doubts about the sustainability of iron ore and steel prices, amid signs of stabilization in the economic recovery, mainly in China. For some analysts, the drop represents a buying opportunity.
– LOJAS AMERICANAS PN drops 16.08%, still suffering from adjustments in the value of the paper after the combination of part of the assets with B2W, which resulted in Americanas. In recent trading sessions, the disclosure of the balance sheet for the second quarter, as well as noise and announcement of acquisition by Americanas, forecast of synergies with the merger and share buyback program weighed heavily.
– ULTRAPAR ON loses 15.99%, working at lows since May 2020, in the wake of the negative reception of the second quarter result. Even the deal to sell 100% of its Oxiteno specialty chemicals unit to the Thai group Indorama for $1.3 billion was not enough to encourage a turnaround.
See the behavior of the main sector indices on B3 in the month:
– Financial index: -1.81%
– Consumption index: -1.42%
– Electric Energy Index: +3.12%
– Basic materials index: -2.16%
– Industrial sector index: +1.49%
– Real estate index: -6.09%
– Public utility index: +3.17%
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