Ibovespa opens lower, with Copom minutes and US interest rates on the radar

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The main index of the Brazilian stock market ended the day at 108,721 points, up 0.18%. Ibovespa operates high this Tuesday. Pixabay The Ibovespa, the main index of the São Paulo stock exchange, the B3, opened with volatility this Tuesday (07), oscillating between highs and lows. The market is keeping an eye, in this trading session, on the repercussions of the minutes of the last meeting of the Monetary Policy Committee (Copom) and on the next signals from the Federal Reserve (Fed, the US central bank) on the course of its interest rates. In the domestic scenario, investors are still attentive to President Lula’s speeches about the Central Bank of Brazil. At 10:10 am, the index retreated 0.25%, falling to 108,345 points. See more quotes. On the eve, the Ibovespa rose 0.18% and ended the day at 108,721 points, mainly driven by the rise in Petrobras shares. With the result, the index accumulates a loss of 4.15% in the month. In the year, the accumulated drop is 0.92%. Initial plugin text What’s messing with the markets? This morning, the Copom released the minutes of its last meeting, signaling caution with the inflationary path in Brazil. The Committee stated that there has been a deterioration in longer-term inflation expectations and added that it will remain “vigilant” to seek the targets set, and may keep interest rates high for a “longer” period than previously anticipated, or even raise them. Higher interest rates in Brazil increase the profitability of domestic fixed-income securities, which attracts foreign capital to the country and values ​​the real at the expense of the dollar and currencies of other currencies. However, the migration to fixed income weighs against the Brazilian equity market. Yesterday, President Lula took a stand against the latest decisions of the Central Bank and said “this increase in interest rates and the explanation they gave to Brazilian society is a shame”. During the inauguration event of Aloizio Mercadante as the new president of the National Bank for Economic and Social Development (BNDES), Lula said that Brazil has a “culture” of high interest rates that “does not match the country’s need for growth” and criticized the Copom’s decision to maintain the Selic, basic interest rate, at 13.75% per annum in the last week. In the United States, investors are awaiting a speech by Fed Chairman Jerome Powell. “Powell’s speech will be important for the market to calibrate expectations, after economic data last Friday (03), such as the payroll report (jobs report), show that American economic activity continues to accelerate”, says the team of BTG Pactual analysis. Last week, the Federal Reserve (US BC) raised its interest rate target by 0.25 percentage points, a smaller increase than the previous ones. But the latest employment report in the United States, with strong and above-expected results, renewed concerns about the level of interest rates needed to bring the country’s inflation back to the target. US Labor Department data released on Friday showed that US job creation accelerated in January, with 517,000 non-agricultural jobs added and the jobless rate falling to 3.4%, the lowest in 53 and a half years old. “Atlanta Fed President Raphael Bostic said yesterday that the strong employment data raises the possibility that the bank may need to raise interest rates to a higher peak than previously expected,” the bank’s analysts explain. Higher interest rates in the United States increase the yield on government bonds in that country, considered the safest in the world. With more attractive returns, investors tend to migrate to American fixed income, which can negatively impact risky assets, such as currencies from emerging countries and stock markets.

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