Ibovespa Slides Downward Amid Global Risk Aversion Dollar
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On a bleak Friday, the Brazilian stock market, marked by the Ibovespa index, concluded the day with a 1.14% decline to 125,946 points.
This drop extended its losing streak to a second week, with a total decrease of 0.67%, following a 1.02% fall the week prior.
Amid this downturn, the dollar experienced a 0.61% rise, briefly surpassing R$5.14 and reaching its highest point since October 2023.
On the same day, fluctuations in domestic interest rates contrasted with a general dip in U.S. Treasury yields.
The market’s mood was heavily influenced by unexpected U.S. inflation figures, which stoked fears of global financial instability.
Márcio Riauba from StoneX noted that these inflation concerns triggered a widespread retreat from riskier assets, boosting the dollar’s value significantly.
The U.S. financial landscape was further rattled by the first-quarter earnings reports from major banks.
Citigroup announced a significant drop in profits of 27% to $3.4 billion.
Similarly, JPMorgan and Wells Fargo faced downturns in their stock values by over 5% and 1%, respectively.
JPMorgan signaled a cautious outlook for the year due to sustained inflation pressures and geopolitical strife.
In response to the ongoing economic conditions, Jeff Schmid of the Kansas City Federal Reserve emphasized the need for continued restrictive monetary policies.
This is due to the tight labor market and persistent inflation above 2%.
Similarly, Austan Goolsbee of the Chicago Fed highlighted potential risks from Middle Eastern instability impacting global energy prices.
In Brazil, Enrico Cozzolino notes Ibovespa‘s stability, hovering around 128,000 points for 12 weeks despite market fluctuations.
As Wall Street closed the week on a somber note, the sentiment was mirrored in the Brazilian market.
Rob Haworth from U.S. Bank Wealth Management observed a shift towards safer investments amid ongoing economic heat.
The trading session concluded with notable losses across various sectors.
Vale dips despite iron ore price rise; Petrobras faces drop amid management changes and dividend issues.
Major Brazilian banks like Bradesco and Itaú Unibanco also retreated, influenced by their international peers.
The Brazilian service sector retracts 0.9% in February. Subdued mood prevails, and hopes for market rebound by Monday.
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