Ore and oil have a day of gains, by expectations for China and fears about supply, respectively; national political news is busy
The Ibovespa future records a session of gains on Friday (9), following the external high and with investors attentive to the repercussion of inflation data here. At 9:03 am (Brasília time), the contract of the index maturing in October was up 1.19%, at 112,330 points. In the forex market, the future dollar for the same month fell 0.51%, at R$ 5.221, while the commercial dollar fell 0.32%, at R$ 5.189 for buying and R$ 5.190 for selling.

In the Brazilian news, the highlight is the August IPCA, which registered deflation of 0.36%, practically in line with expectations. The expectations of analysts consulted by Refinitiv were for a drop in prices of 0.39% in relation to July and 8.72% year-on-year.
The transport group (-3.37%) had the greatest negative impact on the overall index, contributing 0.72 percentage points (p.p.). The drop in this group was influenced mainly by the retraction in fuel prices (-10.82%). In August, the four fuels researched had deflation: vehicular gas (-2.12%), diesel oil (-3.76%), ethanol (-8.67%), and gasoline (-11.64%). The item with the greatest negative impact on the general index, gasoline had a reduction of R$ 0.18 per liter in the refineries last month.

It is worth mentioning that this week Roberto Campos Neto, president of the Central Bank, gave indications considered hawkish (in the sense of monetary tightening) which led the market to adjust its expectations for interest rates, postponing the projections for a cut in the Selic rate.

Besides the national monetary policy, investors continue to reflect the actions of the main Central Banks around the world.
The day before, the European Central Bank promoted a record interest rate hike, while the president of the Federal Reserve, Jerome Powell, made a speech considered tough on inflation. However, both signals were already expected by investors, and did not have much impact on the market.
In the national political news, in the evening, the first Datafolha poll will be released after September 7, when President Jair Bolsonaro (PL) took thousands of supporters to the streets in election rallies, which attracted criticism for politically appropriating the civic date.

Still on the markets’ radar the day before, Bolsonaro went on to promise the payment of R$800 in Brazil Aid. In the electoral propaganda aired on TV on Thursday, the president’s campaign talked about granting an additional R$ 200 for beneficiaries of the program who get a new job.
Currently, the monthly value of the benefit is R$ 600, but the draft budget for 2023 sent by the government itself to Congress only provides resources for an average amount of R$ 405 next year. Bolsonaro’s promise to grant the additional R$ 200 appears after the campaign of former President Luiz Inácio Lula da Silva (PT), who leads the polls for the Planalto Palace, began studying the granting of a bonus of R$ 150 for children up to six years, and other additional to the beneficiaries of Brazil Aid – which replaced the old Bolsa Família, created during the PT administration.

Reuters, citing sources, reported that the candidate for vice-president in Luiz Inácio Lula da Silva’s (PT) ticket, Geraldo Alckmin (PSB), is now being considered to lead the economic policy in a possible new government of the PT candidate. The sources emphasized that the decision is still open.

Attention also to the movement of commodities, with iron ore futures contracts on the Dalian and Singapore exchanges climbing to two-week highs on Friday, posting their biggest weekly gains in six weeks, after China, the world’s largest steel producer, announced more measures to support its Covid-ravaged economy.
Also contributing to sentiment, lower-than-expected inflation in August in China raised hopes of further central bank policy easing. The most-traded iron ore for January on the Dalian Commodity Exchange closed up 3.7 percent at 720.50 yuan ($103.92 ) a tonne, after hitting its highest since August 29 at 724.50 yuan earlier in the session.

Oil is also up on Friday, supported by real production cuts and threats to supply, although the commodity is heading for a second weekly decline as aggressive interest rate hikes and China’s Covid-19 restrictions weighed on the demand outlook.

Russian President Vladimir Putin’s threat to halt oil and gas exports to Europe if price caps are imposed and a small cut in OPEC+ oil production plans announced this week also supported prices. Brent oil advances 1.6% to $90.60 a barrel. West Texas Intermediate (WTI) crude oil also rises 1.6% to $84.88.