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Photo: B3
This Thursday will definitely mark the history of the Ibovespa, the main index of the B3 (Sao Paulo Stock Exchange). The day started with IPCA (Extended Index of Consumer Prices) data coming in above market expectations and with that, future interest rates started the session sharply higher. But Thursday was just the warmup for investors.
Around noon, however, at an event attended by parliamentarians who supported the candidacy, the presidentelect was announced Lula pointed out that the spending cap isn’t much appreciated and that spending on social programs should be viewed as an investment. The market took the message as a harbinger of the end of fiscal worries and deepened the losses. The stock market accelerated its fall, interest rates rose, and the dollar accelerated its rise.
As if that wasn’t enough, the day continued with the confirmation of Guido Mantega, former finance minister of Lula and Dilma, into the government’s transition team. Meanwhile, international markets rose on data showing a slowdown in US inflation.
The stock market ended the day down 3.35% at 109,775 points. In one day, the Ibovespa lost more than R$102 billion in market value. Overall, 86 of the 92 companies that make up the index ended the session in the red🇧🇷
The dollar closed down 3.41% against the real while falling more than 2% against the world’s major currencies. To give an idea of ​​the magnitude of the stress created, the real has depreciated less than two coins in a basket of 151: the Haiti gourde and the Seychelles rupee. in relatives, Here, as the dollar rose against a basket of emerging and developed market currencies, the American currency posted its largest daily decline in 10 years.
Futures rates had their worst session since April 2020, at the height of the market panic over the Covid pandemic. Investors, who expected the ratecutting cycle to start in May next year, only began to price in rate cuts from August. Contracts with shorter maturities even flirted with a circuit breaker during the trading session when negotiations were halted due to very high fluctuation. Interest rates ended up rising more than 1 percentage point along the curve.
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