See stock exchange and dollar quotes this Monday – 02/27/2023 – Market

The dollar fell against the real in the first trades this Monday (27), in line with the weakness of the US currency abroad, while investors keep an eye on the discussions of the Brazilian government about the return of taxation on fuels.

At 9:23 am (Brasília time), the spot dollar retreated 0.23%, to R$ 5.1870 in the sale.

On the B3, at 9:23 am (Brasília time), the first contract dollar futures contract fell 0.59%, at R$ 5.1840.

The spot US currency closed the last session quoted at R$5.1988, up 1.22%.

In the United States, this Monday morning, data on orders for durable goods in January will be released, another clue about how the economic activity in the country is going.

The Stock Exchange closed with the third worst mark of 2023, and the dollar closed high against the real this Friday (24). The Brazilian market closely followed the trend in New York, with a scenario of persistent inflation in the United States, and the market projecting higher interest rates than previously expected.

The Ibovespa closed down 1.67% to 105,798 points. This closing level is worse, for the year 2023, only than those registered on the 3rd and 4th of January. The spot commercial dollar ended the day up 1.16%, at R$5.198. At the maximum of the day, the American currency reached R$ 5.21.

The reaction to the inflation data also appeared in the interest rate market. For January 2024, the contracts went from 13.38% at the close of this Thursday (23) to 13.47%. Upon maturity in January 2025, the rate rose from 12.61% to 12.77%. For January 2027, interest rates increased from 12.87% to 13.04%.

In the United States, the inflation situation seems more delicate than in Brazil. The consumer price index (PCE, its acronym in English) advanced 0.6% in January compared to December, the highest increase since June. Economists surveyed by Bloomberg had expected a 0.5% rise.

In 12 months, US consumer inflation rose 5.4%, compared to 5.3% in December. When looking at the core of the indicator, which removes expenditures on food and energy, the increase in 12 months up to January was 4.7%.

For economists interviewed by Bloomberg, if inflation in the United States does not show signs of slowing down, the Federal Reserve (Fed, American central bank) will have to raise interest rates beyond the level expected by most market agents, in the range between 5% and 5.25%.

Some analysts are already starting to outline a scenario in which the Fed could bring the US basic rate close to 6%, as economic activity and inflation continue at levels above what was expected by the market at this point.

Bruno Komura, an analyst at Ouro Preto Investimentos, points out that inflation in the United States has more influence on the Brazilian market this Friday than the IPCA-15.

“The Fed was already adopting a tougher speech, and the market was more optimistic. Now, it seems that there will be a convergence to the scenario outlined by the central bank, with high interest rates for a longer time”, says Komura.

Victor Candido, chief economist at RPS, recalls that the PCE is the data that the Fed takes most into account when making its decisions. The high inflation, especially in services, shows that the monetary authority will have work to hold prices.

“Until January, the market projected that interest rates in the United States would not exceed 5%. Now, it is already suggested that they could reach 5.50%”, says Candido.

In New York, stock indices also closed lower. The Dow Jones Industrial Average was down 1.02% at the close. The S&P 500 was down 1.05%. And the Nasdaq dropped by 1.69%.

The IPCA-15 — the benchmark for the inflation targeting regime that measures prices between the 16th of the previous month and the 15th of the current month — rose 0.76% in February, accelerating after rising 0.55% in January. The result was above the expectation of economists consulted by Reuters and Bloomberg, high of 0.72%.

In 12 months, inflation decelerated from 5.87% up to January to 5.63% up to February. In the month, the item education was the main contributor to the index, with a rise of 6.41% compared to January.

Service inflation remains at the center of investor attention, due to its still high level, says Lucas Lima, an analyst at VG Research.

Even so, for Lima, the discussion on monetary policy in Brazil should start to change. “The current big question is whether there is room for a reduction in interest rates at the next Central Bank meetings. With a real rate of 8%, Brazil remains in first place in the world ranking for this indicator.”

For the Bloomberg agency, Marco Caruso, chief economist at Banco Original, says that the Central Bank will have an additional challenge to control inflation, with the increase in fuel prices. The end of exemption from some taxes is scheduled for March 1st.

For him, even with the deceleration of the IPCA-15 in 12 months, it is still not possible to say that the behavior of consumer prices is comfortable for BC.

With Reuters