Fear over US interest rates prevents Ibovespa from rising after better-than-expected data in China

This Monday, Ibovespa abandoned the high seen earlier on the return of the Easter holidays in Brazil and the United States, which left the markets closed on Friday. European stock exchanges have not yet reopened.

In New York, the stock markets fall: Dow Jones drops 0.74%, S&P500 drops 0.40% and Nasdaq loses 0.21%. At the same time, the increase in US Treasury bond yields is mirrored in future interest rates, amid doubts about American monetary policy, after the PCE, on Friday, and before the week’s indicator agenda gains strength.

“Markets are waiting for new American data to confirm whether the economy is really heating up and at what level”, describes Gustavo Corradi Matos, CIO at Medici Asset.

Earlier today, the United States industrial activity index prepared by the Institute for Supply Management (ISM) was released, which rose to 50.3 in March, from 47.8 in February. Throughout the week, other American indicators will come out that could help markets in betting on when the Federal Reserve (Fed, the central bank of the United States) will start cutting interest rates.

“There is strong data corroborating that the United States is still at a very strong pace. I believe this tends to impact the interest rate curve”, says Matos, from Medici Asset. In this sense, he explains that this could also influence estimates in relation to the end-of-cycle Selic, which could become higher, given the possibility of postponing the start of the interest rate reduction in the USA.

Positive signs from China, which presented manufacturing data measured by PMIs above expectations in March, are encouraging an increase in shares in the metal sector on the Ibovespa. Iron ore in Dalian rose 2.61%.

Ibovespa and blue chips

Investors remain cautious regarding Petrobras’ decision, after reporting its fourth quarter balance sheet last month, that it will not distribute extraordinary dividends. Today, the Minister of Mines and Energy, Alexandre Silveira, told GloboNews, “that we cannot admit Petrobras with the aim of making profits to distribute to shareholders”.

On Thursday, the Bovespa Ibovespa Index closed up 0.33%, at 128,106.10 points, but fell 4.53% in the first quarter.

“The markets start the second quarter apparently more lukewarm”, describes in a comment Helder Wakabayashi, analyst at Toro Investimentos, highlighting, regarding Brazil, that the rise in iron ore after higher-than-expected PMIs in China is a positive trigger for shares from Vale.

According to Wakabayashi, the markets are seeing the Chinese data as a consistent movement towards improving the dynamics of the country’s economy and the recovery of China’s industry.

In addition to the “China factor”, the market monitors news linked to Vale. The process for choosing the new president of Vale, who will succeed Eduardo Bartolomeo from January 1, 2025, has already been launched on the market and company executives have begun to be surveyed by internationally renowned headhunting consultancies, according to the report. Broadcast (Grupo Estado’s real-time news system) with people close to the process and experts.

On Friday, in the USA, the Federal Reserve’s favorite inflation index was released. The markets were closed at the time. The PCE rose less than expected in February compared to January, reinforcing hopes that the process of reducing the American basic interest rate could begin from June.

However, in a speech also on Friday, the president of the Federal Reserve, Jerome Powell, said that the directors of the monetary authority do not see it as appropriate to cut interest rates until they gain confidence that American inflation is on a sustained downward path.

Throughout the week, the main announcement is about the US job market, in addition to Powell’s speech.

In Brazil, the indicator agenda is less robust and will gain strength in the coming days. Meanwhile, corporate news, with the release of balance sheets such as Hapvida and IRB Brasil, remains on the radar.

At 1:00 pm, the Ibovespa fell 0.68%, to 127,230 points, close to the session’s lows. Vale advanced 0.61%, Petrobras was unstable. The spot dollar appreciated by 1%, at R$5.06.