Ibovespa falls with geopolitical tension and expectations for the Fed, even after a turn in Wall St - ISTOÉ DINHEIRO

SAO PAULO (Reuters) – Brazil’s main stock index tumbled on Monday, after escalating tensions in Ukraine increased risk aversion in global markets, already tense ahead of the U.S. monetary policy meeting this week.

Stocks on Wall Street, however, which had collapsed earlier, turned to the positive in the end. The Nasdaq dropped 4.9% and closed up 0.6%.

The domestic index reduced losses but did not follow the broader recovery in New York, with retailers, tech companies and Vale weighing negatively.

The Ibovespa dropped 0.92%, to 107,937.11 points, adding to the second consecutive drop. The financial volume of the session was 30.7 billion reais.

On Wall Street, the Nasdaq and S&P 500 stopped four consecutive sessions in the red, with a strong recovery in the last hour of trading. The CBOE volatility index rose earlier to its highest since January 2021.

In Europe, the STOXX 600 index plunged 3.8%, its worst daily performance since June 2020.

Two uncertainties in particular surround the markets. One is the Federal Reserve’s monetary policy decision, which will be released on Wednesday, after a two-day meeting between members of the US central bank.

The expectation is for the tone of the statement and for clues about when the interest rate should rise in the country, with many analysts projecting the beginning of the cycle for March. The measure impacts the global liquidity of equity markets and companies’ capital costs.

In addition, there are concerns over escalating tensions in Ukraine, which has seen Russia build up troops on its borders. Some nations including the United States and Britain have threatened to impose sanctions if the Russians invade the neighboring country, although Moscow denies it has plans for an offensive.

The move “is an increase in risk perception precisely in a week of (meeting of) the Fed”, says Lucas Monteiro, multimarket trader at Quantitas.

With so much tension abroad, the local scene took a back seat. President Jair Bolsonaro sanctioned the 2022 Budget with a forecast of 1.7 billion reais for readjustments of public servants. The Central Bank’s Focus survey showed a slight increase in inflation expectations for 2022.

B3 normally operates on Tuesday, the anniversary of the city of São Paulo.

HIGHLIGHTS

– INTER UNIT dropped 7.3%, BANCO PAN dropped 5.9%, LOCAWEB ON dropped 5.1% and MÉLIUZ dropped 3.6%, in a negative session for companies seen as growth, more sensitive to interest rates .

– MAGAZINE LUIZA sank 7.4%, VIA dropped 3% and AMERICANAS retreated 2% — all three came from three high trading sessions. Lojas Americanas shares are no longer traded on B3 as of this Monday, after a combination of shareholding bases with Americanas.

– VALE ON fell 1.2%, third straight decline, after iron ore prices retreated in Asia, with cautious traders ahead of the Spring Festival holidays and the Beijing Winter Olympics.

– USIMINAS PNA rose 2.4% and stood out among steel companies. BTG Pactual raised the share’s target price from 24 to 25 reais. The bank has a buy recommendation for the paper.

– GPA ON soared 7.4%, the highest since October.

– BRADESCO PN rose 2.1%, in a mixed session for the financial sector. Itaú BBA raised the paper’s recommendation to ‘outperform’, with credit spread recovery.

– PETROBRAS PN rose 0.6% and ON increased 0.2%, despite the drop in oil prices.

– IRB BRASIL ON fell 5.4%, extending the drop from the last session. In the morning, the company reported a net loss of 113.8 million reais in November, while premiums written fell 0.5% compared to the same stage in 2020. Claims increased 13.5%.

– MARFRIG ON rose 4.7%. The target price of Marfrig’s share was raised from 25 to 27 reais by Jefferies.

(By Andre Romani)