Ibovespa closes higher, but Fed reduces momentum in session with surge in Arezzo and Grupo Soma By Reuters

Ibovespa closes higher, but Fed reduces momentum in session with surge in Arezzo and Grupo Soma By Reuters
Ibovespa closes higher, but Fed reduces momentum in session with surge in Arezzo and Grupo Soma By Reuters
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© Reuters. Panel with share prices on the São Paulo stock exchange 03/21/2019 REUTERS/Nacho Doce

By Paula Arend Laier

SÃO PAULO (Reuters) – The closed higher this Wednesday, but far from the session’s highs, amid statements by the Federal Reserve chair acknowledging an improvement in the inflation scenario, but cooling bets that the North American central bank will begin to cut interest rates in the first quarter.

The Brazilian corporate scene also occupied the spotlight, with Arezzo (BVMF:) and Grupo Soma (BVMF:) soaring amid expectations of a merger between the two companies, while Santander Brasil ended the day down, following the results for the fourth quarter of 2023 frustrate market estimates.

The Brazilian stock market reference index, Ibovespa rose 0.28%, to 127,752.28 points. At the day’s high, it reached 129,558.45 points. At the minimum, at 127,326.08 points. The financial volume totaled 27.1 billion reais.

The Fed kept interest rates in the range of 5.25% to 5.50% per year on Wednesday, as economists expected, with Jerome Powell saying the rate is probably at its peak and almost all members of the Federal Open Market Committee (Fomc, its acronym in English) believe that it will be appropriate to reduce it

He added that inflation has eased notably, although it remains above the monetary authority’s target, and noted that the Fed doesn’t think it necessarily needs to see weaker growth for inflation to fall. But he stressed that he does not think an interest rate cut in March is likely.

In New York, the stock markets closed lower, with news from companies like Alphabet (NASDAQ:) also on the radar. The yield on the 10-year US Treasury bond was 3.9256%, up from 4.057% the day before.

In the view of the head of EQI Research, Luís Moran, the Fed — Powell’s statement and statements — was the main driver of the São Paulo stock exchange this Wednesday, with Powell adopting a neutral speech and reinforcing that the North American BC is not comfortable with a cut already in March.

“And as long as it is not clear when this cut will begin in the USA and how fast it will be, there is no way for the market in Brazil to take off”, he added.

In January, the Ibovespa accumulated a drop of 4.79%, with the first month of the year marked by a strong net outflow of external capital from the stock exchange, amid the repricing of bets regarding the Fed’s next steps, after a certain euphoria at the end 2023, when the forecast for a cut in March gained strength.

Until the 29th, foreign sales exceeded purchases by 5.3 billion reais in the month.

The São Paulo stock exchange closed before investors learned about the interest rate decision of the Monetary Policy Committee (Copom) of the Brazilian BC, announced this early evening, confirming expectations of a reduction in the Selic rate by 0.50 percentage points, to 11.25% per year.

In its statement, the Copom informed that its members foresee a reduction of the same magnitude in the next meetings.

HIGHLIGHTS

– GRUPO SOMA ON rose 16.81%, to 7.92 reais, and AREZZO ON jumped 12.09%, to 62.59 reais, after the fashion retail groups announced that they are in negotiations for a possible merger of their bases shareholders, but have not yet reached a binding agreement.

– SANTANDER BRASIL UNIT (BVMF:) closed down 1.88%, at 28.65 reais, after recurring net profit of 2.204 billion reais in the last three months of 2023, below analysts’ forecasts, in a performance affected by provisions related to Americanas (BVMF:). The bank’s CEO stated that the recurring credit portfolio is behaving well.

– ITAÚ UNIBANCO PN (BVMF:) rose 1.08%, to 32.78 reais, and BRADESCO PN (BVMF:) closed with an increase of 0.52%, to 15.35 reais. Both will release their respective balance sheets next week.

– RD ON (BVMF:) dropped 3.62%, to 25.30 reais, with Citi’s report on the radar cutting the share recommendation for “sale” and reducing the target price of the shares from 27 to 24 reais.

– VALE ON (BVMF:) fell 1.48%, to 67.76 reais, weakened by the fall in futures in China, following persistently weak factory data in the second largest economy in the world.

PETROBRAS PN (BVMF:) advanced 0.32%, to 40.45 reais, renewing historic highs, even with the fall in prices abroad. The barrel of , used as a reference by the company, fell 1.4%, to 81.71 dollars.

– NATURA&CO ON appreciated by 3.43%, to 16.00 reais, endorsed by a Citi report raising the share recommendation to “buy/high risk”, as well as the target price of the shares from 15 to 21 reais.

– WEG ON (BVMF:) closed down 1.97%, at 32.34 reais, with analysts at XP (BVMF:) updating estimates for the company and incorporating a more cautious view in relation to short-term organic growth, while reiterating a “neutral” recommendation for the shares, with a target price of 35 reais.

The article is in Portuguese

Tags: Ibovespa closes higher Fed reduces momentum session surge Arezzo Grupo Soma Reuters

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