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Donald Trump (Official White House Photo by Tia Dufour)
Global stock markets show a slight downward movement this morning amid the return of US President Donald Trump to the White House after being hospitalized for three days with Covid-19. Trump’s return softened uncertainties about the US presidential race and justified a surge in global markets the day before.
In addition, the International Monetary Fund (IMF) has improved its economic prospects for Brazil in 2020, but has 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), according to Reuters.
In Brazil, investors are following the news on the political front. After leading frictions in recent weeks, the mayor (DEM-RJ), Rodrigo Maia, and the Minister of Economy, Paulo Guedes, decided to make peace. Yesterday, they had dinner together and apologized. In addition, the two defended the pacification and continuity of the reform agenda, according to Estadão.
In the corporate news, the Mateus Group included in its Initial Public Offering (IPO) prospectus the accident that occurred at Mix Atacarejo, in São Luís (MA), and opened a period for withdrawal. In addition, 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.
1. Global exchanges
Global stock markets fell this morning after US President Donald Trump returned to the White House.
In Europe, the Euro Stoxx index fell 0.25%. The CAC, in Paris, fell 0.05%, while the FTSE 100, in London, lost 0.46%. Germany’s DAX is down 0.09%. Italy’s FTSE MIB registered an increase of 0.13%.
S&P 500 futures were down 0.26%, while Dow Jones futures were down 0.10%. Nasdaq futures fell 0.40%.
Trump’s doctors said yesterday that the president’s health continued to improve over the past 24 hours, although doctor Sean Conley cautioned that he may not be completely out of the woods just yet. At the same time, the market follows the negotiations of the United States government on a new economic stimulus package.
The Speaker of the House of Representatives of the United States, Nancy Pelosi, and the Secretary of the Treasury, Steven Mnuchin, spoke yesterday for almost an hour, but they have not yet reached an agreement. They should have a new conversation today on the subject.
In Asia, markets closed higher, after the Central Bank of Australia (RBA) said it would maintain its economic policy. In Japan, the Nikkei rose 0.52%, while Hong Kong’s Hang Seng Index rose 0.90% and South Korea’s Kospi rose 0.34%. In China, markets are closed due to a local holiday.
* See the performance of the markets, at 6:50 am (Brasilia time):
New York
* S&P 500 Future (US), -0.26%
* Nasdaq Future (US), -0.40%
* Dow Jones Futures (US), -0.10%
Europe
* Dax (Germany), -0.09%
* FTSE 100 (UK), -0.45%
* CAC 40 (France), -0.05%
* FTSE MIB (Italy), + 0.17%
Asia
* Nikkei (Japan), + 0.52% (closed)
* Hang Seng Index (Hong Kong), + 0.90% (closed)
* Kospi (South Korea), + 0.34%
* WTI oil, + 0.92%, at $ 39.58 a barrel
* Brent oil, + 0.97%, at $ 41.69 a barrel
* Bitcoin, $ 10,732.65, + 0.4%
2. Agenda
Investors are now monitoring Anfavea’s data on motor vehicle production and sales. In addition, the Mixed Budget Commission (CMO) will be installed today, at 9 am, in the Chamber of Deputies, which will analyze the 2021 Annual Budget Law Project (LOA).
In the United States, the monthly trade balance will be released at 9:30 am and the August Jolts report at 11:00 am. But the biggest shock may come from the Chairman of the Federal Reserve, Jerome Powell, speaking at 11:40 a.m. Fed regional leaders Patrick Harker (from Philadelphia at 1 pm), Raphael Bostic (from Atlanta at 3 pm) and Robert Kaplan (from Dallas at 7 pm) also spoke at this session.
3. Trump at home
The market reacts today to a series of events that occurred yesterday, in addition to Trump’s medical discharge. The International Monetary Fund (IMF) improved its economic prospects for Brazil in 2020, but warned that risks remain “exceptionally high and multifaceted” and that public debt is on track to end the year at around 100% of domestic product. Gross (GDP), according to Reuters.
The institution stressed that the rapid implementation of structural reforms that guarantee (fiscal) consolidation in the medium term will be essential. “In the absence of unequivocal evidence of maintaining the spending ceiling, any additional spending could undermine market sentiment and raise interest rates,” the Fund said.
The issue of fiscal adjustment was already a great concern in the market, but it gained momentum with the government’s plans to finance the Citizen’s Income program with precautions. 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 must be presented tomorrow (7).
The deterioration in investor confidence is manifested by the increase in public spending on public debt. According to Folha, 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.
4. Guedes and Maia
In Brazil, investors follow the news on the political front. After leading frictions in recent weeks, the mayor (DEM-RJ), Rodrigo Maia, and the Minister of Economy, Paulo Guedes, decided to make peace. Yesterday, they had dinner together and apologized. In addition, the two defended the pacification and continuity of the reform agenda, according to Estadão.
Maia said 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 payroll to generate “massive jobs.” He 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.
5. Corporate radar
The Mateus Group included in its Initial Public Offering (IPO) prospectus the accident that occurred in Mix Atacarejo, in São Luís (MA), where the fall of gondolas caused the death of an employee. According to Estadão, the company opened the deadline until October 9 for institutional investors who have already submitted their reservation request. In addition, 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.
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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