The 3 factors that made the Ibovespa fall and caused the dollar to rise this Tuesday

SÃO PAULO – The Ibovespa closed on Tuesday (6) with a combination of three factors that caused pessimism.

The first was US President Donald Trump’s instruction to White House officials to halt negotiations on a trillion-dollar coronavirus stimulus package. A deal between Democrats and Republicans seemed closed until earlier this week. Trump defended on Twitter that the stimulus will only be approved after he is elected to a second term.

Earlier, another factor of pessimism was the statement by Federal Reserve Chairman Jerome Powell that the US economic recovery is far from complete and could still spiral downward if the coronavirus is not controlled.

“At this initial stage, I would say that the risks of monetary policy intervention remain asymmetric. Too little support would lead to a weak recovery, creating unnecessary hardship for families and businesses, ”he said. President do Fed.

Finally, the Globo news highlighted that President Jair Bolsonaro should leave the Renta Ciudadana announcement until after the municipal elections. Sources reportedly told the newspaper that the president does not want to endorse unpopular measures to fund the program before the elections.

Recently, the possibility was raised that the government would extinguish the 20% discount on the simplified declaration of Income Tax to make room in the Budget for the program, which would replace Emergency Aid.

The Ibovespa fell 0.49%, to 95,615 points with a financial volume of R $ 26,784 million.

In the morning, stock markets around the world rose because Trump was released from the hospital. The American was hospitalized for three days to combat a coronavirus infection. With his health improving, the scenario for the November presidential elections is less uncertain.

The halt in negotiations for anti-Covid stimulus and the Fed’s bucket of cold water on the more optimistic expectations of economic recovery, however, ended up prompting investors to rush to ditch long positions. The Dow Jones, S&P 500 and Nasdaq indices fell 1.34%, 1.4% and 1.57% respectively.

Meanwhile, the commercial dollar rose 0.52% to R $ 5,594 in the purchase and R $ 5,595 in the sale. The future dollar maturing in November recorded gains of 0.23%, at R $ 5,592 in the Secondary market.

In the future interest market, the ID of January 2022 rose six basis points to 3.33%, the ID of January 2023 advanced eight basis points to 4.79%, the ID of January 2025 rose seven basis points to 6.64% and the January 2027 DI registered a positive variation of six basis points at 7.53%.

Still on the radar, the International Monetary Fund (IMF) improved its 2020 economic outlook for Brazil, but warned that risks remain “exceptionally high and multifaceted” and that public debt is on track to end the year at around 100 % of the Gross Domestic Product (GDP).

In politics, after leading frictions in recent weeks, the mayor, Rodrigo Maia (DEM-RJ), and the Minister of Economy, Paulo Guedes, decided to make peace. Yesterday, they had dinner together and apologized. The two defended pacification and the continuity of the reform agenda, according to Estadão.

Returning to the American news, Trump’s doctors said yesterday that the president’s health continued to improve over the past 24 hours, although doctor Sean Conley has warned that he may not be completely out of the woods yet. At the same time, the market follows the negotiations of the United States government on a new economic stimulus package.

Public debt

The issue of fiscal adjustment was already a great concern in the market, but it gained strength with the government’s plans to finance the Citizen Income program with precautions, plans that are being adjusted.

Yesterday, Senator Márcio Bittar (MDB-AC), rapporteur for the 2021 Budget and the Federal Pact proposal, said that any solution to create the Citizen Income will respect the spending ceiling and will have the seal of the head of the economic team. According to Folha de S.Paulo, the dialogue is “on track” and a new proposal is due tomorrow (7).

The deterioration in investor confidence is manifested by the increase in public spending on public debt.

According to sheet, the average term of Brazilian government bonds issued since January 2020 has been cut in half, from 4.7 years to 2.4 years. As a result, in just one year, twelve-month maturities practically doubled, from R $ 553 billion to R $ 1.02 billion, reaching almost 25% of total debt.

The interest demanded by the market to refinance the government has also accelerated, especially in recent weeks and days, even for the shorter maturity papers. Even with the Selic rate at 2% per annum, the National Treasury has been forced to pay more than double to sell bonds on the market maturing in two years.

Guedes and Maia

In a meeting last Monday night, Maia said that there will be a union to advance the economic agenda in Congress, while Guedes once again defended the approval of a basic income program for 2021 and a measure to reduce the payroll to be generated ” massive jobs ”. She also reiterated the commitments to send another stage of tax reform.

Yesterday, the government leader in Congress, Eduardo Gomes (MDB-TO) said that the veto on the payroll tax exemption for 2021 will be revoked by the parliamentarians.

With that, the benefit would be guaranteed for 17 sectors of the economy for another year. However, the president of the Senate, Davi Alcolumbre (DEM-AP), adopted a maneuver to postpone the vote and cancel the session of the National Congress. According to Estadão, Alcolumbre will meet today with party leaders to set the date for the Congress session.

Furthermore, President Jair Bolsonaro reaffirmed that he will nominate a “terribly evangelical” name for his second nomination to the Federal Supreme Court (STF) in July. He suggested that he might even bring a pastor to court.

Another highlight is the news that the appeal trial of the Attorney General’s Office (AGU) was scheduled for next Thursday (8) on the written testimony of President Jair Bolsonaro in the investigation that investigates alleged political interference in the Police Federal.

Corporate radar

Notable in the corporate news, Marfrig bought Campo del Tesoro, in Argentina, for US $ 4.6 million, while BR Malls and Multiplan invested R $ 9 million and R $ 18.6 million, respectively, in the Delivery Center.

Higher highs

Higher number of casualties

Also noteworthy are the data released last night by the Central Bank on the first day of the PIX. Until 6:30 pm, 3.5 million keys were registered in the Brazilian instant payment system. The news that the Ministry of Agriculture confirmed the occurrence of an outbreak of classical swine fever (CSF) in Piauí, in a subsistence pig farm, may influence meat producing companies.

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