Ibovespa Tracks Commodities And Ends Higher

(Agencia CMA Latam) – Ibovespa, the benchmark stock market index in Brazil, rose 0.18%, closing at 66,897.98 points Friday, driven by higher oil and iron ore prices abroad, as well as the feeling of political stability brought by the vote that shielded president Michel Temer from being prosecuted for corruption. Ibovespa had a weekly gain of 2.1%.

“In Brazil, investors continued to speculate about the next steps of the government, which is now talking about reforms. That is a much more relieving picture. It calms the market,” said Álvaro Bandeira, chief economist at Homebroker Modalmais.

Meanwhile, the almost 1% rise in oil prices and the more than 1% increase in iron ore prices helped the index. Petrobras’ preferred shares rose 0.67%, while Vale’s shares rose 1.36%. According to Elite Broker’s economist Herz Ferman, the miner was also influenced by rumors that it could buy a mine from Companhia Siderúrgica Nacional (CSN), causing steelmakers’ shares to climb 3.97%. Vale denied the report.

Also, “rumors that Braskem could move its headquarters to the United States has pulled the company’s shares a lot,” Ferman said. The chemical company’s shares rose 4.05%. Still, in the business field, Fibria shares rose 2.39%.

Meanwhile, the locally traded US dollar closed the session rising by 0.38%, at R$ 3.1260, driven by the external market after the release of better-than-expected US labor data. In the week, the dollar was down 0.28%. For the coming week, the weak dollar trend holds, as the Brazilian government moves toward reforms.

Regarding Ibovespa, analysts say the index has cleared the way to remain bullish on Monday due to lower political tension and greater liquidity in the foreign market. While Bandeira does not rule out a timely profit-taking movement, Ferman points out that advancing the discussions on pension reform may be crucial for the index to remain bullish this week.

“The market is more lenient about the possibility of a reduction in the fiscal target. Everyone is taking it for granted and accepting it positively, but I think the government will have to give pension reform as a counterpart,” Ferman said.

by Agencia CMA Latam

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