Follow dollar on interest rate definition day in Brazil – 05/03/2023 – Market

The dollar opened with a drop in this so-called “super-Wednesday”, with the market awaiting the decision of the Fed (Federal Reserve, the US central bank) and the Central Bank of Brazil on interest rates in both countries.

In the United States, the result of the meeting of the Fomc (committee that meets to define interest rates) comes out at 3:00 pm (Brasília time). The Copom (Monetary Policy Committee) decision is expected to be released after 6:00 pm.

In Brazil, the expectation is that the Selic (basic interest rate) will be maintained at 13.75% per year, while in the US an increase of 0.25 percentage points in interest rates is expected by the Federal Reserve.

At 9:06 am (Brasília time), the spot dollar retreated 0.41%, to R$ 5.0254 in the sale. On the B3, at 9:06 am (Brasília time), the first contract dollar futures contract fell 0.28%, to R$ 5.0545.

The Brazilian stock exchange closed down this Tuesday (2), reflecting the American indices and the market’s caution before the decisions on interest rates scheduled for this Wednesday.

The Ibovespa closed down 2.40% to 101,926 points. The dollar rose 1.16% to R$5.046.

In the futures markets, interest contracts maturing in January 2025 fell from 12.06% to 12.00%. Those for 2027 were stable at 11.81% to 11.76%, and those for 2029 went from 12.11% to 12.13%.

The drop in the Brazilian Stock Exchange follows US indices, impacted by concerns about the country’s banking sector. Dow Jones and Nasdaq closed down 1.08%, while the S&P500 fell 1.16%.

The drop in the Ibovespa was also driven by stocks linked to commodities, such as Vale and Petrobras. Vale’s shares fell 4.26%, while Petrobras registered a 4.53% drop in common shares and 4.09% in preferred shares, after a decrease in oil and iron ore prices.

In the American market, the shares of American regional banks closed down with investors’ fears about the health of the US financial system, which pulled the indicators down.

PacWest Bank, a medium-sized American bank, even had its shares suspended in negotiations in New York and recorded a 27.8% drop in its shares this Tuesday. Western Alliance, another regional bank, was down 15%.

With Reuters