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With no strong rises so far, can Ibovespa turn the tide this week?

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Ibovespa moved sideways this Wednesday (28), closing practically stable (+0.07%) and remaining at 108 thousand points (Image: REUTERS/Amanda Perobelli)

Positive highlight of global markets in 2022, the Ibovespa is experiencing a week of high volatility, detached from the stock indices abroad.

The Ibovespa moved sideways this Wednesday (28), closing practically stable (+0.07%) and remaining at 108 thousand points. The weak movement in the domestic market is not in line with the recovery that Wall Street has had, although the US indices have contributed with some support.

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After touching 114,000 points last Thursday, the Ibovespa began a sequence of three falling trading sessions, having dropped more than 2% on both Friday and Monday and ended yesterday with a devaluation of 0.68%.

Considering today’s closing, the Ibovespa accumulates losses of 2.9% this week alone.

Outside remains in focus

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Régis Chinchilla and Luis Novaes, from the analysis team at Land Investmentscomment that, despite the appreciation of foreign stock exchanges, the prospect of recession still remains abroad.

United States and China show no signs of recovery, with expectations of higher US interest rates and Chinese currency reaching the lowest levels since the 2008 financial crisis, requiring help from national banks to contain the devaluation”, they highlight.

At Europethere is the aggravating factor of the conflict between Russia and Ukraine, which enters a new chapter after the leaks in the Nord Stream gas pipelines, which transported gas in the Baltic Sea.

So far, there is no information on who may be behind the leaks, but the European Union does not rule out the possibility of sabotage. Russia, which has reduced the volumes of gas transported to Europe after receiving tough sanctions over its invasion of Ukraine, also said sabotage was a possibility and that the leaks undermined the continent’s energy security.

According to the Interfax news agency, the Russian security service FSB is investigating the damage suffered by the Nord Stream gas pipelines as “international terrorism”.

Chinchilla and Novaes say that the episode is yet another indication that prices should continue to rise in Europe, leading central banks to adopt an even more aggressive stance with interest rates to contain inflation.

“In this context, a good part of the assets with exposure abroad are depreciating, fearing that the global economic situation will penalize the next results of these companies”, complete the analysts.

Elections add volatility

In addition to fears related to the recovery of the economy in developed countries, the Brazilian stock market needs to deal with the proximity of the presidential elections.

After the survey by Ipec (formerly Ibope) on Monday, the survey by the Quaest institute for Genial Investimentos also pointed out this Wednesday the possibility of Luiz Inácio Lula da Silva (PT) end the presidential race on Sunday, being elected in the first round.

Part of the market is reconciling with the former president, with some managers ruling out a “setback scenario” for what the previous PT government was like in the event of Lula’s victory.

Even so, the market is still surprised by local news. Vitorio Galindo, head of fundamental analysis at quantizedsays that, removing signs that he will occupy a position within an eventual Lula government, making the possibility of becoming Minister of Economy even more distant, Henrique Meirelles threw “a big bucket of cold water” on investors.

“Today, there have been some comments that former governors of the Northeast could assume the position of minister. Didn’t cause a very good feeling [no mercado]”, completes Galindo.

The analyst explains that, although there is some risk already priced in, there is still uncertainty in the market about the elections.

“Especially because we don’t know who will win or what is the exact risk we will take with whoever wins”, he says.

Analysts at Terra Investimentos believe that the market should not move much this week if relevant news for the economy does not appear.

“As I said, the external environment is not favorable, and many companies in the market will be penalized for this. Slaughterhouses and oil companies are an example of possible victims”, say Chinchila and Novaes.

The duo sees a potential appreciation of domestic assets, considering the “favorable” Brazilian economic situation, but does not believe it will be enough to boost the market in the short term.

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Source: Moneytimes

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