Follow the dollar rate and the stock market today (2) – 01/02/2024 – Market

The Brazilian Stock Exchange registered a drop this Tuesday morning (2), in the first trading session of the year, following foreign indices, in a correction movement after ending 2023 at its highest nominal level in history.

On the positive side, Vale and Petrobras shares rose, driven by the rise in oil and iron ore abroad and mitigating the session’s losses.

The dollar was already firmly appreciating, while investors await new employment data in the United States.

“These data [de mercado de trabalho] are the most relevant for defining interest rate trajectories [dos EUA]. The entire market expects the unemployment situation to ease, in the sense that unemployment will eventually increase. The slightly looser labor market should allow interest rates to be cut”, says Paulo Gala, chief economist at Banco Master.

At 11:33, the Ibovespa fell 0.55%, to 133,515 points, while the dollar rose 0.70%, quoted at R$4.886.

The rise of the dollar against the real was influenced in part by the sharp gains in the index that compares the North American currency to a basket of strong pairs, which rose 0.6% around 9:40 am (Brasília time).

While this rally was exacerbated by a thin session, with many traders still on vacation after the holiday season, it also reflected some nervousness ahead of the release of a key U.S. government employment report on Friday.

A higher-than-expected number could postpone bets on when the Federal Reserve, the US central bank, will begin its monetary easing.

However, for now, investors are still expecting that the United States and other advanced economies, such as the United Kingdom, will begin to reduce interest rates in the first half of this year, said Guilherme Esquelbek, an analyst at Correparti Corretora.

This perspective tends to put pressure on the dollar, which accumulated a drop of 8.08% in 2023, the most intense annual drop since the 17.5% drop seen in 2016, largely due to the high interest rate differential between Brazil and the USA, but also due to the perception of improvement in domestic public accounts and the strength of agribusiness in the first half of last year.

According to market investors, the real’s losses this Tuesday were limited by the rise in the price of important commodities, such as oil and iron ore, following encouraging data on China’s industry.

On the domestic scene, “although it is not making a price, the market naturally continues to look at our fiscal, with the government having some opposition in Congress in this regard”, said Fernando Bergallo, operations director at FB Capital.

According to him, after the parliamentary recess, the market should carefully monitor the progress of the provisional measure for the gradual reinstatement of the payroll, which needs to be approved by parliamentarians within 120 days after its publication in the Official Gazette.

With Reuters