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The stock exchange guarantees gains in the third trading session, supported by Petrobras shares; the dollar falls

The Brazilian Stock Exchange gained a little, gaining for the third consecutive session this Monday (5), supported by the rise in oil prices abroad and Petrobras shares amid the banking sector.

The dollar was also falling, losing strength after weak US economy data and good estimates for GDP (gross domestic product) growth and a decline in inflation in Brazil, which supported the real.
As a result, Ibovespa rose 0.12% to 112,696 points, while the dollar fell 0.50% to R$4.929.

On Sunday (4), Saudi Arabia announced it would cut its oil production by 1 million barrels per day from July under an agreement with OPEC+ in an effort to prevent a fall in the product’s price.
Following the announcement, the price of a barrel of Brent oil rose and closed at US$76.37, up 0.32% this Monday.

Petrobras benefited from rising oil prices overseas, which helped Ibovespa post a positive close. The company’s common shares gained 0.55%, while preferred shares gained 1.28%.

Ibovespa also supported shares of Bradesco, Banco do Brasil and Itaú, which were among the most traded shares in the session, rising 1.62%, 0.62% and 0.18%. This Monday, Credit Suisse revised its recommendations on the banking sector while changing shares.

The biggest riser of the day came from CVC, which rose 10.83% after the announcement of its new executive chairman and an agreement with the founder for a potential investment of R$75 million in the company.

However, Vale shares remained under pressure on the stock exchange throughout the session, and the mining company closed the day down 0.80% despite a rise in iron ore contracts overseas, which was seen as a correction to recent gains.

Despite slow progress, the Brazilian Stock Exchange is benefiting from improving projections for the country’s GDP, inflation and interest rates.
On Monday morning, the Central Bank (BC)’s Focus Bulletin saw an increase in expectations for the growth of the Brazilian economy this year, with GDP growth forecast rising to 1.68% from 1.26%.

The market also expects the Selic (base interest rate) to be reduced by 0.50 percentage points in September, compared to the earlier estimate of 0.25 points, increasing bets on more aggressive interest rate cuts this year.
The president of the BC, Roberto Campos Neto, said this Monday that inflation is improving, but admits that the process is still slow, especially in the case of the core, which measures less volatile prices.
He also said long-term inflation expectations are high and BC needs to “push.”

Mauricio Moura, director of relations, citizenship and conduct supervision at the BC, who is one of the members of COPOM (Monetary Policy Committee), reinforced the forecast of a decline in interest rates by saying that inflation in Brazil is already low. Control and Celik will fall again.

“Interest rates will fall again at some point. The trend is that at some point it will fall, as soon as conditions allow, it will fall,” he said in the premiere of a weekly live broadcast promoted by the institution.
As a result, the futures interest rates markets, especially the long-term ones, fell again. Contracts maturing in January 2024 rose to 13.17% from 13.20%, while contracts for 2025 rose to 11.32% from 11.47%. The interest rates for 2026 increased from 10.79% to 10.62%.

The economic data strengthens the real position against the dollar, which has been steadily declining in recent trading sessions, mainly due to the attractiveness of resources in the country.

“There has been a significant inflow of foreign investment into Brazil, and the statements by Campos Neto and Moura that inflation is improving gives a sense of calm, which could further fuel this movement,” says Marianne Vass, economist at Fintech Gorilla. Is.”

Economic projections support the stock exchange as they attract investments in companies in the country. A fall in interest rates mainly benefits stocks of companies linked to the domestic economy, such as consumer and manufacturing sectors.

In fact, the difference in Brazil’s interest rates compared to the US is one of the factors that reinforces the reality this Monday, says economist Rafael Pacheco of Guide Investimentos.

That’s because the market’s main bet this week is that the Fed should keep US interest rates unchanged at its next meeting on June 14, while Brazil’s Selic rate cut is only scheduled for September. In this period, the Brazilian currency will strengthen against the dollar as US fixed income becomes less attractive.

The real may also get support from rising oil prices, which strengthens the currencies of commodity exporting countries.

“Latin American currencies in particular have further improved performance, driven by the return of risk appetite in financial markets,” said Eberri market analyst Eduardo Moutinho. “We expect the weekend’s news that Saudi Arabia will cut oil production , will provide support to commodity currencies.”

In the United States, major stock indexes fell, and the dollar also fell against other strong currencies after the country’s weak economic data.

This Monday, the U.S. Commerce Department reported that orders at North American factories increased 0.4% in April, after a 0.6% gain in March. The percentage was less than economists consulted by Reuters had expected, a rise of 0.8%.

ISM (Institute for Supply Management) said its PMI (Purchasing Managers Index Survey) for the US services sector fell to 50.3 last month, from 51.9 in April. Economists consulted by Reuters had forecast 52.2.

As a result, the DXY index, which measures the US currency’s performance against other strong currencies, remained flat, indicating a loss of strength in the dollar.
The country’s stock indices closed down. The Dow Jones, S&P 500 and Nasdaq fell 0.59%, 0.20% and 0.09%, respectively.

The highlight of the day in the US market were Apple shares, which hit an all-time high of US$184.91 ahead of the company’s announcement of its latest augmented reality device. However, after the product announcement, the company’s shares fell and closed the day at US$179.61, down 0.75%. (Marcelo Azevedo/Folhapress)

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