Marking a significant event in Brazil's economic landscape, the Ibovespa, the country's principal stock index, observed a rise of 0.67% to reach a peak of 128,184 points on December 1, 2023. The index hasn't seen such levels since July 2021, drawing a span of more than two years. This surge emerged despite a cautious speech by Jerome Powell, the chairman of the U.S. Federal Reserve, hinting at possible ascension in U.S. interest rates.
Bullish Market Amid Global Economic Signals
The market, however, showed a positive reaction. Andre Fernandes, a variable income specialist and partner at A7 Capital, pointed out that recent data suggest a slowing down of the U.S. economy. This speculation raises the chances of a U.S. interest rate cut in March to over 50%. In addition, Roberto Campos Neto, the president of the Central Bank of Brazil, presented optimistic views on Brazil's inflation expectations. His comments, made at an event in Sao Paulo, were well received by the market.
Stock Movements: Winners and Losers
On the downside, shares of Braskem, a Brazilian petrochemical company, plummeted by 6.17%. This drop came after an emergency declaration by the Maceio municipality in Alagoas, due to an imminent risk of collapse at a Braskem mine. Petrobras shares also witnessed a decline by 0.84%, following a dip in global oil prices. Brent crude fell 2.16% to $79.11, slipping below the $80 mark.
Conversely, Magazine Luiza and Cielo shares emerged as the front runners on the Ibovespa, posting gains of 7.43% and 6.97% respectively. Vale, a significant component of the index, also experienced a considerable rise of 1.72%. Amid these shifts, the U.S. dollar closed lower by 0.70% at R$ 4.88, registering a weekly depreciation of 0.36%.
A Glance at the Future
With these developments, analysts anticipate a rally towards the end of the year, hoping for a Christmas gift in the form of an all-time high for the Ibovespa. The potential triggers for such a scenario could be a halt in the rise of U.S. interest rates, and data indicating a cooling U.S. economy. This optimism is further fueled by the FTSE Brazil Capped Index, reflecting approximately 85% of the free float adjusted market capitalization of the Brazilian market, concentrated notably in finance, energy minerals, and non-energy minerals.