Ibovespa rises 2.8% and retakes 102 thousand points, with reforms underway, obscuring the fall in GDP; dollar falls 1.7%

SÃO PAULO – The Ibovespa closed higher on Tuesday (1) with a series of positive news in the political sphere, which ended up completely overshadowing the below-expected data for the Gross Domestic Product (GDP) for the second quarter.

While the market waited today for only the extension of emergency aid, President Jair Bolsonaro surprised and informed that he will send the administrative reform proposal to the National Congress next Thursday (3).

At the same time, the Minister of Economy, Paulo Guedes, told the senators that the tax reform and the Proposed Amendment to the Constitution (PEC) of the Federative Pact will also be sent soon.

“Congress works tirelessly to modify the regulatory framework and unlock investment. We are carrying out administrative and tax reforms, in addition to the PEC of the Federative Pact, “said Guedes.

According to the minister, the Federative Pact is ready to be launched to Congress “as soon as politics dictate the moment.”

As for emergency assistance, as expected, the extension will have four more installments of R $ 300. The current amount of the benefit is R $ 600.

Given these news, the benchmark index of the Brazilian Stock Exchange increased by 2.82%, to 102,167 points with a financial volume of R $ 26,657 billion.

Meanwhile, the commercial dollar fell 1.75% to R $ 5.3845 in the purchase and R $ 5,385 in the sale. The future dollar for October registered a decrease of 2.17%, to R $ 5,378 in the Secondary market.

In the future interest market, the ID of January 2022 fell seven basis points to 2.79%, the ID of January 2023 fell nine points to 3.97%, the ID of January 2025 registered losses of 15 points basic to 5.77% and the ID of January 2027 fell 14 basis points to 6.73%.

This morning, the data of the Brazilian Gross Domestic Product (GDP) was published in the second quarter. The country’s economy contracted 9.7% in the period, compared to the first quarter of the seasonally adjusted series.

This figure was slightly worse than the median expectation of economists, which was a 9.2% decrease in the second quarter compared to the first three months of the year, according to the Bloomberg survey. The previous measurement was revised to fall 2.5%, from -1.5% previously.

Another highlight at the national moment is the Budget for 2021, which was sent to Congress last night. Adding the expected deficits between 2021 and 2023, the hole is R $ 572.9 billion.

Outside, after the Dow Jones and S&P 500 indices consolidated their biggest gains for the month of August since the 1980s, US equity markets rallied again, this time driven by a 4% appreciation in stocks. Apple after the company made a rollout.

This operation made great technology more accessible and more liquid. Several analysts have revised their projections for the company upwards.

The most positive tone from abroad also came from the Caixin / Markit China Purchasing Managers Index (PMI) for August, which stood at 53.1 points. Readings above 50 indicate expansion, while results below 50 reveal retraction.

The result beat expectations and sent the yuan higher against the dollar, its highest level since January 2011. It was also the fourth consecutive month above the 50 mark.

At the same time, unemployment in the eurozone has risen, as the effects of the coronavirus continue to be felt. The unemployment rate in the region was 7.9% in July, showing a deterioration in the scenario. However, the number is still below the record seen in the midst of the crisis.

Budget 2021

The government yesterday sent to Congress the Budget proposal for 2021, which foresees a deficit in public accounts until 2023. Adding the expected deficits between 2021 and 2023, the hole is R $ 572.9 billion, according to The state of São Paulo.

Next year a deficit of R $ 233.6 billion is expected; in 2022, the result must be negative at R $ 185.5 billion; in 2023, R $ 153.8 billion will be needed to close government accounts.

However, the government emphasized that pandemic spending will be limited to 2020.

The government reserved R $ 34.8 billion for 2021 to spend with Bolsa Família next year, according to Or Balloon. Renda Brasil was left out of the budget bill.

Another highlight of the text is the insufficiency of R $ 453,715 billion so that the golden rule is fulfilled next year. This rule prohibits the government from taking financing to pay for current expenses, such as the payment of salaries, for example. Therefore, the government will need authorization from Congress to make these expenditures.

He also drew attention to the fact that the government gave up giving more resources to Defense than to Education in 2021.

In addition, the forecast in the Budget proposal for 2021 foresees an increase of 3.2% of GDP next year. The projection of the minimum wage is R $ 1,067, an increase of 2.1% compared to the current value of R $ 1,045.

Emergency help

In accordance with Folha de S. Paulo, the expansion of aid for four months to R $ 300 should increase the Union’s spending this year by another R $ 100 billion. With this, the government will reach an unprecedented figure, with a deficit of R $ 1 trillion in public accounts in 2020.

Another highlight in the Brazilian news is the conclusion of the investigations into an alleged “cracking” scheme that would have been commanded by Senator Flávio Bolsonaro when he was a federal deputy. According to CNN, the Specialized Action Group to Combat Corruption of the Rio de Janeiro Public Ministry closed the investigations.

The result was forwarded to the Rio attorney general, Eduardo Gussem, who forwarded the material to the criminal attorney general, Ricardo Ribeiro Martins. You can request further investigations or file a complaint with the Special Organ of the Court of Justice of Rio de Janeiro.

Still in corporate news, according to CNN, President Bolsonaro was diagnosed with kidney stones and will undergo surgery to remove it in September.

Corporate radar

The market will reflect today the balance sheets published the previous day by Lojas Renner (LREN3), IMC (MEAL3) and the Technos group (TECN3).

Lojas Renner recorded a net profit of R $ 818.1 million in the second quarter, an increase of 254.5% in the annual comparison. The result was driven by the recognition of R $ 1 billion related to a tax credit.

Higher highs

Higher number of casualties

Another highlight is the announcement of the partnership between Bradesco (BBDC3; BBDC4) and JPMorgan. The Brazilian bank will inherit the private banking clients of JPMorgan, which no longer operates in this segment in Brazil.

Also in the corporate news, Pague Menos listed its share offering (IPO), but had to give a discount in relation to the initially forecast price. The share had a price of R $ 8.50; According to the document published last month, the estimated price range was between R $ 10.22 and R $ 12.54 per paper.