Ibovespa is unstable amid rising commodities and fear of recession in the US

Renewed fears of recession in the United States and internal concerns after criticism by the President of the Republic, Luiz Inácio Lula da Silva, to the Central Bank (BC) leave the Ibovespa unstable this Thursday, despite the rise in commodities. At 11:43 am, the Ibovespa yielded 0.03%, to 112,147.93 points (-0.07%), after opening at 112,219.38 points and Daily high of 112,567.45 points, up 0.08%, and low to 111,306.96 points (-0.82%). On Wednesday, it closed up 0.71%, at 112,228.39 points.

After falling, oil rose, as well as iron ore rose 1.55% in Dalian, which stimulated the rise of shares in the respective sectors on the Ibovespa. The expectation that the reopening in China will stimulate the economy is still well seen in the market. However, concerns about a recession in the United States remain on the radar.

Earlier, Boston Fed President Susan Collins said she predicted the need for further rate hikes, likely to push them above 5% in the US.

In the opinion of Felipe Cima, variable income operator at Manchester Investimentos, the big question is to see who will win this fight, whether the market or the Fed. “The Fed says that interest rates have to go up more, and the market saying that it has to go up less. This is the big question this year”, he says.

“The markets start the day in a generalized fall. Fears of recession in the USA weigh in the news, but we had the speeches of members of the Fed indicating that the monetary authority is also sensitive to American activity, raising more uncertainties regarding the pace of tightening interest rates” , describes Ativa Investimentos in a note. Earlier, in the minutes relating to the November meeting, the directors of the European Central Bank (ECB) mentioned risks of rising inflation.

Investors are waiting for a lecture (4:30 pm) by BC president Roberto Campos Neto, at an event at the University of California, after Lula’s criticism of the monetary authority.

In an interview with GloboNews at the end of the day yesterday, the Chief Executive questioned what good is an independent Central Bank if inflation and interest rates are high. Lula also reaffirmed that he will exempt the collection of Income Tax for those earning up to R$ 5,000, but linked the measure to the approval of the tax reform. To raise the minimum wage from R$1,302 to R$1,320 in 2023, as the government intends, the expected annual expenditure is R$7 billion.

According to Cimas, one cannot ignore Lula’s criticism of the BC, but there is a moderate reaction from the Ibovespa. “The government is having some ‘luck’, given the circumstances. No matter how hard the government tries, it is difficult to bet against Brazil”, he says, citing, for example, that the stock market is “cheap”.

At the same time, attention continues on Americanas, which is still looking for a short-term solution to the recently announced billionaire shortfall. The shares went up for auction, falling 17.24%.