By Andre Romani
SAO PAULO (Reuters) – The main Brazilian stock index rose sharply on Friday, ending its best week since early March, in a cool move from Wall Street.
Banking stocks and Petrobras shares were the main supports for the local index in the session.
The Ibovespa rose 1.33% to 106,927.79 points. For the week, the index accumulated a gain of 4.1%, its best performance since the week ended March 5 of last year. The financial volume was 26.1 billion reais.
The Dow Jones collapsed on Friday in New York, after the release of balance sheets by major banks including JPMorgan and Citigroup, while the Nasdaq Composite and the S&P 500 closed in the black. The three indices ended the week in the negative.
According to Filipe Villegas, strategist at Genial Investimentos, the performance of the Ibovespa in recent trading sessions against the US stock exchanges can be explained by a rotation movement, with investors reducing positions in growth companies, such as technology, to allocate to value companies, such as banks and exporters.
The move comes in view of the expectation of higher interest rates in the US in the coming months, which would affect more the companies that depend on financing. As the Ibovespa has a relevant participation of banks and companies related to commodities, the local index ends up being more benefited, he explains.
In addition, the recovery of papers that, in Villegas’ view, were discounted, such as construction companies and shopping malls, in addition to the lack of internal political news of greater weight in the market, also helped in the positive performance, according to the analyst.
Domestically, retail sales in Brazil expanded 0.6% in November compared to the previous month, the Brazilian Institute of Geography and Statistics reported this Friday. Analysts in a Reuters poll were expecting a decline of 0.2%. The data comes a day after the volume of services also surpassed market projections.
Even so, says Villegas, these “data seem to be delayed”, since since November the Selic rate has risen again, which should affect both sectors, and there was the propagation of the Ômicron variant, also with a potential impact on economic activity.
HIGHLIGHTS
– BRMALLS ON soared 7%, after rejecting a merger proposal sent by rival ALIANSCE SONAE, whose shares advanced 2.3%. brMalls said the proposal “consistently understates the fair economic value” of the company and its asset portfolio. Despite this, brMalls remains open to discussing a possible merger or acquisition transaction, a source close to the negotiations told Reuters.
– PETROBRAS PN rose 3.7%, to 31.45 reais, and is close to the paper’s historical highs, while ON rose 2.1%. Brent crude rose 1.9%, boosted by supply constraints and fears of a potential Russian attack in Ukraine. The state-owned company also reported a reduction in the 2022 production target.
– INTER UNIT jumped 7.9%, after the company’s shares auction this Friday. News mentions the sale of 30 million shares per shareholder.
– VALE ON rose 0.6%, despite the drop in iron ore prices in China. Steel companies had mixed performance.
– BANCO DO BRASIL ON rose 2.6%, SANTANDER BRASIL UNIT advanced 1.1%, BRADESCO PN gained 1.6%, while ITAÚ UNIBANCO PN fell 0.8%. The move took place amidst the release of reports by analysts about the sector and in the face of a movement of paper rotation.
– MINERVA ON rose 1.7%, after announcing that it is considering migrating its shareholding base abroad. The company is inclined to switch to US-based Nasdaq, a source close to the company told Reuters.
– MAGAZINE LUIZA ON rose 3.9% and AMERICANAS ON advanced 2.4%, while VIA ON dropped 0.5%, after retail data surprised positively.
– LOCAWEB ON dropped 4.1%, its third consecutive low, while POSITIVO ON dropped 3.9%.
– CAMIL ON, which is not on the Ibovespa, sank 9.6%, the biggest drop in a session since it was listed on the stock exchange in 2017, after releasing its financial statement.
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