Ibovespa opens lower, with monetary policy and economic data on the radar

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The day before, the main index of the Brazilian stock market advanced 0.13%, to 119,221 points. Ibovespa Burak The Weekender/Pexels The Ibovespa, the main index of the São Paulo stock exchange, the B3, opened slightly lower this Friday (16th), in a movement to correct the latest increases and with the monetary policy of Brazil and from abroad on investors’ radar. The market also reflects inflation data released by the Getulio Vargas Foundation (FGV) and the preview of GDP from the Central Bank of Brazil (BC). At 10:05 am, the index fell 0.42%, to 118,719 points. See more quotes. On the eve, the Ibovespa rose 0.13%, to 119,221 points, the highest level since October last year. As a result, the index began to accumulate increases of: 1.75% in the week; 9.91% in the month; 8.51% in the year. What is messing with the markets? The BC released, this morning, the Economic Activity Index (IBC-BR), considered the “preview” of the Gross Domestic Product (GDP). In April, the indicator registered expansion of 0.56% in comparison with March, when there was a retraction of 0.14%. The GDP is the sum of all goods and services produced in the country and serves to measure the evolution of the economy. The BC’s IBC-Br is an index created to try to anticipate the GDP result, but the results were not always close to the official data released by the IBGE. Also this morning, the FGV released the General Price Index 10 (IGP-10) for June. This index measures the accumulated inflation between the 11th of the previous month and the 10th of the current month and, in June, it had a drop of 2.20%, the biggest reduction in the entire historical series, started in 1993. In the last 12 months, the accumulated decrease is 6.31%. The IGP-10 is made up of three sub-indices: the Broad Producer Price Index (IPA), which gives me wholesale inflation and dropped 3.14% in the month; the Consumer Price Index (IPC), with a drop of 0.18% driven by the Transport group; the National Construction Cost Index (INCC), which was the only one that advanced, up 1.19% in June. These results are in line with data observed in the latest release of the Extended Consumer Price Index (IPCA), by the Brazilian Institute of Geography and Statistics (IBGE), which reflects the country’s official inflation. In May, the IPCA rose 0.23%, in a sharp deceleration and well below market expectations. Among the groups that fell the most in that month, Transport also stands out. A reduction in inflation, according to specialists, reinforces the expectations that the BC may start a cycle of low Selic, basic interest rate, soon. The next meeting of the institution’s Monetary Policy Committee (Copom) is next week. International markets Abroad, investors echo the latest monetary policy decisions in several countries. Yesterday, the European Central Bank (ECB) raised borrowing costs for the eighth consecutive time, by 0.25 percentage points, to 3.5% per annum, the highest level in 22 years. Today, the head of the Belgian central bank, Pierre Wunsch, said that the ECB will only stop the cycle of hikes if it sees a “substantial drop” in inflation. Earlier, the Consumer Price Index for the euro zone was released, which showed an accumulated increase of 6.1% in the last 12 months through May, compared to 7% in April. In Japan, “the cap on the 10-year Japanese government bond yield was kept at 0.5% and short-term interest rates remain at -0.1%”, despite stronger-than-expected inflation , highlights the BTG Pactual analysis team. Still on the Asian continent, China cut some of its main interest rates the day before, as a way of trying to stimulate activity in the second largest economy in the world, which has been slowing down. The Chinese government should soon announce new economic stimuli. Initial plugin text

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