The Ibovespa future today (19) operates in drop of 1.07%, to 109.268 points, following the foreign markets.
The Focus Bulletin of this Monday (19) brought a new projection of inflation drop for this year: from 6.40% to 6%. It is the twelfth consecutive high for the data.
The expectation for the Gross Domestic Product (GDP) was also revised upwards: from 2.39% to 2.65%. As for the Selic rate, the projection remains the same: 13.75%.
The basic interest rate, by the way, is the week’s highlight. On Wednesday (21), Brazil and the USA issue a new monetary policy decision.
And, despite the prevailing opinion being that the Selic has already reached its ceiling and should be kept at 13.75%, part of the market foresees a final adjustment of 0.25 percentage points.
“We were highly convinced that the Central Bank would stay put, keeping the Selic at 13.75%, but the surprise inflation in the USA and the need for more hikes abroad puts pressure on the emerging countries to have to raise interest rates a little more, which affects the projections here. This is because this scenario appreciates the dollar and depreciates the other currencies. The higher the dollar and the weaker the real, the worse for inflation,” explains Stephan Kautz, chief economist at EQI Asset.
For next Wednesday’s decision (21), the asset maintains the Selic call at 13.75%, with rate stability and tough talk from Copom, eliminating the chance of an interest rate cut in the short term and signaling that the committee remains vigilant with inflation.
The Ibovespa closed Friday (16) down 0.61%, at 109,280 points. Throughout the day, the index varied between 108,488 points and 109,952 points. The financial volume was R$39.3 billion, on a day marked by the exercise of options. In the week, the stock market registered a fall of 2.69%.
The Fomc, the monetary policy committee of the Federal Reserve (Fed), the American central bank, also meets on the 20th and 21st and is expected to raise interest rates by 0.75 percentage points.
Last week, the release of mixed inflation data reinforced the uncertainties about the committee’s next steps.
It is worth remembering that the US consumer inflation (CPI) surprised the market with an increase of 0.1% when a deflation of 0.1% was expected. On the other hand, producer inflation registered a deflation of 0.1%, in line with the market consensus.
“We expect the American central bank to raise interest rates by 0.75 percentage points, taking interest rates to 3.25%, from the current 2.5%. Then we see two more hikes of 0.50 p.p. by the end of the year, then 0.25 p.p. in the first meeting of 2023, with interest rates reaching 4.5%,” says Kautz.
Besides the CPI surprising negatively, he points to the strong labor market as a reason for the interest rate hike, which rules out, at least for now, the recession hypothesis.
“You have more jobs available in the US than people willing to work. So the central bank feels comfortable to make a strong interest rate hike, given that inflation is still well above target.
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