Ibovespa is up 1.51% with an improvement in Petrobras and the IPCA-15; dollar falls and closes at R$5.11 | Economy

Ibovespa, the main stock index on the Brazilian stock exchange, operates on the rise this Friday (26), with benign data from the IPCA-15 and the improvement in Petrobras shares. The dollar operates in decline.

The Brazilian inflation preview registered a 0.21% increase in prices in April, and accumulated 3.77% in the 12-month window. The numbers came below financial market expectations. Projections were for an increase of 0.29% for April, reaching 3.85% in 12 months.

In the United States, inflation measured by the PCE price index, favored by the Federal Reserve (Fed, the country’s central bank) came in line with expectations, which also encouraged investors.

See below for a summary of the markets.

The dollar closed down 0.89%, quoted at R$5.1163. At minimum, it was R$5.1092. See more quotes.

As a result, you accumulate:

• drop of 1.60% in the week;
• increase of 2.01% in the month;
• gain of 5.44% in the year.

The day before, the North American currency closed up 0.28%, quoted at R$5.1620.

The Ibovespa closed up 1.51%, at 126,526 points.

As a result, you accumulate:

• increase of 1.12% in the week;
• drop of 1.23% in the month;
• decline of 5.71% in the year.

The day before, the index fell 0.08%, to 124,646 points.

Understand what makes the dollar rise or fall

Markets have great relief this Friday, after favorable inflation data in Brazil and the United States. Here, the Broad National Consumer Price Index 15 (IPCA-15) — considered the preview of the country’s official inflation — came in below expectations.

Investors were anxiously awaiting the result since the change in the fiscal target by the federal government. As shown by the g1, experts were already expecting a review, but the proposed alternative was not well received. Analysts were already working with the possibility of the cycle of falling interest rates ending sooner than expected.

The warning, by the way, was made both by the president of the Central Bank, Roberto Campos Neto, and by the Minister of Finance himself, Fernando Haddad. But the benign result of inflation brings reassurance that it may not be necessary to change course so quickly.

“Today’s result appears to have been favorable, with underlying services recording a reading below the historical median and retreating slightly in relation to March’s IPCA-15”, says Rafael Costa, analyst and member of the macro strategy team at BGC Liquidez, in report.

“Inflations in practically all general cores monitored by the Central Bank fell and remained at very low levels for the standards of the period. We just have to be careful not to extrapolate the optimism that can be generated due to the good reading of the release.”

In the US, the PCE price index, the Fed’s favorite for monitoring inflation, was released this Friday. The indicator rose 0.3% last month. In the 12 months to March, inflation increased 2.7%, after rising 2.5% in February.

Additionally, February data has not been revised and shows a 0.3% PCE increase. Economists consulted by the Reuters agency predicted that the index would rise 0.3% in the month and 2.6% on an annual basis.

Rates on 10-year Treasuries, a global investment benchmark, accelerated their decline after data showed that inflation in the United States rose moderately in March.

“Even with the annualized numbers a little higher than expected, the quarterly data released yesterday was so bad that the market was certainly preparing for something worse,” Helena Veronese, chief economist at B. Side Investimentos, told Reuters. “The chance of the Fed starting to cut interest rates in September is back on the radar.”

Another important data was the growth of the US Gross Domestic Product (GDP) in the first quarter of 2024, which was weaker than expected by the market. The annualized rate was 1.6%, much lower than the 3.4% in the fourth quarter of 2023. Against the previous quarter, the economy grew just 0.4% in the first three months of the year.

Analysts expected 2.2% growth from January to Marchaccording to Market Watch consensus.

This was the first estimate from the Department of Commerce, published on Thursday (25). The US publishes its growth at an annualized rate, which compares GDP with that of the previous quarter and then projects the variation for the entire year at the rate of those three months.

Previously, the market expected interest rates to start falling in the first half of this year. However, with data still strong from the American economy — and, especially, inflation not returning to the Fed’s 2% target —, investors already believe that the downward cycle may take longer to begin.

Higher interest rates in the world’s largest economy end up driving investments into the country, which takes money from other markets, especially emerging ones, such as Brazil. In this context, the dollar gains an advantage over the real.

In total, around R$21.95 billion in extraordinary dividends will be released, out of a total of R$43.5 billion. Payments will be made in two installments: in May and June this year.

The new perspective caused Petrobras’ preferred shares to rise more than 2% this Thursday and another 1.3% this Friday.

This text, from 2023, only brought the general lines of the tax reform. Now, it is necessary to approve the regulations, which will be done via bills. Among the points to be regulated are the products that will make up the basic food basket and the so-called “sin tax”, created to discourage items that are harmful to health and the environment.