Ibovespa retreats after BC increases Selic pace and Ambev soars

O Ibovespa (IBOV) closed down this Thursday, after a volatile session, marked by corporate results, with emphasis on Ambev, and repercussion of the decision of the central bank to increase the rate of increase in the basic rate of fees from the country.

Reference index of the Brazilian stock market, the Ibovespa fell 0.62%, to 105,704.96 points, having reached 105,282.37 points at the worst moment and 107,209.64 points at the highest of the day (+0.80%). The financial volume totaled 29.3 million reais.

With such performance, the Ibovespa renewed its low in about 11 months and is on its way to close the week with a negative performance and engage the fourth consecutive monthly loss. So far, the weekly loss is 0.43% and the decline in October reached 4.63%. In 2021, the drop reaches 11%.

Given the deteriorating fiscal scenario, BC raised the Selic by 1.5 percentage points on Wednesday, at 7.75% per year, seeking to quell the growing inflationary pressures, and indicated that it should repeat the dose in December.

Since last week, several banks have been revising their projections for the decision of the Monetary Policy Committee (Copom), with many already expecting the 1.5 point increase.

According to brokerage analyst Clear Rafael Ribeiro, the 1.5-point increase and the commitment to another increase were not enough for the market, as it showed a BC reactive to the economic scenario and not proactive to anticipate problems.

“This perception made the yield curve incline a little more, with investors believing that, taking into account the current pace of inflation and the Copom’s passivity, the Committee will have to step up even more in 2022 and 2023,” he said.

And the stock exchange usually responds negatively to the prospect of higher interest rates on the horizon, among other reasons, due to the effect on the cost of capital of companies and the potential migration of resources from variable income to fixed income.

“If the Copom does not show a greater commitment to curbing inflation, the market will continue to place risk on the curve and this will generate a new bearish momentum for the Ibovespa, which would be in favor of the very short-term trend,” added Ribeiro.

The penultimate trading session of the week still had a backdrop further postponement of the vote of the PEC on Precatório and a higher-than-expected increase for the October IGP-M.

Abroad, Wall Street closed in the blue.

Highlights

AMBEV (ABEV3) jumped 9.72% after the beverage manufacturer disclose strong revenue growth between July and September, when it reached the highest consolidated volumes ever recorded in a third quarter. At the maximum, the stock soared almost 11%.

Brf (BRFS3) advanced 6.56% amid speculation about a potential merger/acquisition transaction involving Marfrig.

Bradesco BBI raised the stock’s recommendation to “outperform”, highlighting, among other factors, the document on the sale to the Marfrig (MRFG3) of 3.8% of the company’s capital by a single BRF shareholder.

Multiplan (MULT3) appreciated by 1.77% against a backdrop of net income of 99.4 million reais in the third quarter, with growth in same-store sales on a year-over-year and quarterly basis and an improvement in the occupancy rate in its shopings compared to previous quarter. The company expects record sales in October.

Vale (VALE3) lost 1.01% before the release of the third quarter balance sheet, on a day of falling iron ore futures in China.

The mining company announced the resumption of activities at the Onça Puma mine, as well as notification from the SEC on proceedings against the company involving management of the Brumadinho disaster.

Petrobras (PETR4) advanced 0.94% having on the radar the result of the company’s third quarter, after the market closed, in a session without a clear trend in oil prices abroad.

In the sector, petrorio (PRIO3) closed down 7.26%.

Itaú Unibanco (ITUB4) gave 0.21% and Bradesco (BBDC4) lost 0.34%.