Ibovespa operates in decline, with fiscal framework and measures for credit on the radar

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On the eve, the main index of the Brazilian stock market retreated 2.12%, to 103,913 points. B3 Headquarters Amanda Perobelli/Reuters The Ibovespa, the main index of the São Paulo stock exchange, the B3, operates in decline this Thursday (19), after a sharp retreat the day before, still evaluating the challenges of the new fiscal framework and the measures announced to stimulate credit in the country. Abroad, fears about inflation and possible interest rate hikes are increasing. At 10:15 am, the Ibovespa fell 0.69%, at 103,324 points. See more quotes. On the eve, the index fell by 2.12%, to 103,913 points. With the result, it started to accumulate a high of 1.99% in the month. In the year, however, it has losses of 5.31%. Government delivers new fiscal rule project to Congress What is messing with the markets? Doubts remain among specialists as to whether the government will be able to comply with the rules established by the new fiscal framework. The market is suspicious of Minister Fernando Haddad’s ability to approve measures that increase tax collection, a prerequisite for meeting targets. “The main problem with the framework, in my view, is not its design, which I don’t even think is very bad. It’s making it compatible with government commitments, which in any public policy announced promises expansion of spending”, wrote the chief economist at Quantitas , Ivo Chermont. “If you are skeptical about the execution capacity, then, you need to be confident in the punishment for non-compliance. (…) There is no punishment and even some budgetary control mechanisms (such as contingencies) are being put in the waiting room” , continues. The Ministry of Finance announced this Thursday a set of 13 measures intended to stimulate the credit market and boost Public-Private Partnerships (PPPs) in states and municipalities. In the end, the economic team hopes that the set of measures, if implemented, will expand the credit market as a whole, reducing costs and interest rates, in addition to stimulating investments in infrastructure. Abroad, attention is on speeches by agents of the Federal Reserve (Fed) and disclosures of indicators in the United States, such as sales of used homes and applications for unemployment benefits. Leaders have been expressing concern about core US inflation, stressing that the Fed should raise US interest rates at the next meeting, in early May, and keep the level high for longer, pursuing the 2% target. In addition, corporate results are on the radar to measure the temperature of the American economy. “Yesterday, the result of Morgan Stanley closed the sector of large American banks with results that beat estimates, but showed a strong contraction in profits of 19%, impacted by lower activity in the capital market that affected the investment banking segment”, says XP report. In Europe, reassessments by economic agents on the direction of interest rates also continue. ECB board member Isabel Schnabel said on Wednesday that core inflation in the euro zone was “persistent” and that all prices except energy were showing “high momentum”. “With unrest in the banking sector abating and inflation still high, for example in the UK, we see monetary policy being reassessed again,” Joost van Leenders, senior investment strategist at Van Lanschot Kempen, told Reuters. “You have persistent inflation and higher expectations for monetary policy, but also lower growth. And that’s a negative picture for equities and earnings.” Initial plugin text

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