ADRs from Brazilian companies increase their rise in the US on a closed B3 day; Azul rises more than 5%

On a day off at B3, due to the Proclamation of the Republic holiday, receipts for Brazilian shares listed on the American markets – ADRs, or American Depositary Receipts – trade higher.

The Dow Jones Brazil Titans 20 ADR (BR20) index rose 0.85% at 12:55 pm, at 19,944 points, following the general performance of stock exchanges in the United States – which pointed to a rising opening since the first pre-market negotiations. The EWZ ETF (index fund) rose 1.24% at the same time, quoted at US$33.80.

The BR20 brings together the ADRs (American Depositary Receipts) of the main companies in Brazil, and the EWZ is the main Brazilian ETF (Exchange Trade Fund) traded on the American market. It replicates the MSCI Brazil index.

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The most relevant US stock indices extend the previous day’s gains this Wednesday (15), in the face of economic data that indicate a cooling in activity and suggest the possibility that the Fed (Federal Reserve, the country’s central bank) may have In fact, the cycle of rising interest rates has ended.

While lower-than-expected consumer inflation (CPI) in the US boosted the gains of the S&P 500, the Nasdaq and the Dow Jones on Tuesday (14), this Wednesday the PPI (producer price index) gains spotlights.

The indicator’s increase in October was 1.3%, on an annual basis, against an expectation that it would reach 1.9%. The monthly drop of 0.5% compared to September was the largest recorded since 2020.

While the S&P 500 rose 0.55% at around 12:55 pm, at 4,520 points; the Nasdaq advanced 0.66%, to 14,188 points; and the Dow Jones, 0.44%, at 34,980 points.

Biggest ups and downs

Among Brazilian ADRs, performances are not uniform, despite the general increase in indices.

Among the highlights of the increase is the share of Azul (AZUL4), which advanced 5.57% at 12:55 pm. The company reported preliminary and unaudited results for the third quarter of 2023 on Tuesday, indicating an operating profit of R$957.4 million, which represents growth of 137% compared to the same period in 2022.

On the operational side, passenger traffic (RPK) increased by 12% on an increase in capacity of 11.5%, resulting in an occupancy rate of 82.2%, also above last year’s figures.

Despite the positive numbers, the company estimates Ebitda (earnings before interest, taxes, depreciation and amortization) of R$5.2 billion for 2023, below the previous estimate (of R$5.5 billion), “due to recent volatility fuel prices and reduced capacity, along with lower international cargo volumes.”

BRF’s ADR (BRFS3) leads the losses, falling 1.16%. The company saw its net loss almost double in the third quarter of 2023. The negative result grew 91% compared to the same period last year, to R$262 million.

Check out the biggest highs and lows this Wednesday (15):

Global optimism

Today’s session also features gains in other global markets. In Europe, confidence that the monetary tightening in the USA and also in the United Kingdom has already come to an end is boosting stock markets.

The British statistics agency reported that local CPI slowed to an annual rate of 4.6% in October, the lowest level in two years. The result brings the country closer to the US situation, where the inflation index released yesterday shows that prices have accumulated an annual increase of 3.2% until October.

In Asia, the Shanghai Stock Exchange closed up 0.55%, while the less comprehensive Shenzhen stock index rose 0.68% and Hong Kong’s Hang Seng gained 3.92%.

There, the boost came from stronger activity data. According to China’s National Bureau of Statistics (NBS), industrial production in the country rose 4.6% year-on-year in October, while retail sales increased 7.6%. Both readings came in better than analyst consensus.

Furthermore, the People’s Bank of China (PBoC) maintained the interest rate on the one-year medium-term loan facility (MLF) at 2.5%. With the operation, the monetary authority injected 1.45 trillion yuan into the system – which “will help alleviate liquidity concerns in the context of additional issuance of government bonds to support fiscal stimulus”, says Commerzbank.

(With information from Bloomberg, CNBC and Reuters)