2024-07-05 20:46:00
truce. After weeks of escalating internal concerns, mainly related to the outlook for public accounts, a relief has finally occurred in the past few days, bringing broad positive effects, with positive impacts on stock markets, interest rates and foreign exchange.
Markets this week
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- Ibovespa: +1,91% | 126,267 points
- S&P 500: +1,95% | 5,567 points
- Nasdaq: +3,50% | 18,353 points
- Dollar: -2,27% | 5,4618 Reais
- Bitcoin: -6,40% | $56,461
The rise and fall of the US dollar
“Good communication improves everything,” Finance Minister Fernando Haddad said this week. That has been the tone of the past few days, which have been marked by a sharp increase in fiscal concerns at the beginning of the week and an easing in the following days.
What happened step by step?
- Wednesday, July 3: After a government meeting with the economic team, Haddad said at a press conference that evening that President Lula was determined to Compliance with the fiscal framework and announcement of R$25.9 billion in mandatory spending cuts Haddad said some of these measures might be brought forward in the 2025 budget. More information should be available in the federal government’s revenue and spending report, due on July 22. Anticipation of the meeting had already sent the dollar down to nearly 5.55 reais on the same day.
- Thursday, July 4: The information was seen as a positive sign of fiscal commitment following the announcement the night before. The relief was mainly felt in the exchange rate. The dollar fell below 5.50 reais, Interest rates will drop significantly in the future.
- Friday, July 5: In a hangover day following a busy week, with few impactful news releases, major assets were close to stable.
What else you should read:
Who runs the stock exchange?
You may have read some worrying news this year regarding foreign investors pulling out of stock exchanges.
Why do we monitor this data so carefully? According to B3 data for the year to date (as of July 2), foreigners account for 54.60% of this year’s trading volume.
In other words, more than half of the volume on the Brazilian Stock Exchange is influenced from abroad. See how the market volume shares are divided:
- personal: 13,80%
- corporate investor: 26,80%
- Foreign Investors: 54,60%
- Financial Institutions: 4,00%
- others: 0,80%
Therefore, monitoring foreign investment flows on the stock exchange is often interpreted as a thermometer of the Brazilian market.
How are we doing this year? A The outflow of foreign capital from B3 in 2020 is the strongest since the outbreakwith outflows exceeding 42 billion reais in the first half of the year. However, at the beginning of this month, Flows were positive, reaching R$1.46 billionas of July 3, according to the latest data.
Why? The strong exit this year was driven by U.S. interest rates remaining high for longer than expected and by a heightened perception of fiscal risks in Brazil.
We expect this situation to reverse and foreign investment will once more be attracted. We will continue to monitor these volumes.
You should also read:
Rio style bags
Soon, B3 will have a new competitor: Rio de Janeiro Mayor Eduardo Paes officially launched New Brazilian Stock Exchangewill be managed by the Americas Trade Group (AGT).
6 things you need to know:
- When will it start operating? The launch is expected to take place in the second half of 2025. The exchange is still in the final stages of obtaining regulatory authorization from the central bank and the CVM. There will also be a system testing phase, which should take six months.
- Who is ATG? The company was commanded by Claudio Pracownik; Acquired by Mubadala CapitalAbu Dhabi Sovereign Wealth Fund, 2023. The name of the exchange has not yet been determined.
- Will it compete with B3? The CEO said that the initial goal was to bring more volume to Brazil. The second moment, when no more new volume enters the market, there will inevitably be competition for volume. market share.
- What products will be traded? The new exchange is reportedly Will start trading stocks and fund shares in the spot marketSecond, it must also play in the futures, options and derivatives markets in addition to foreign exchange.
- Can the same company’s shares be listed on two exchanges at the same time? oh Rio Tinto Stock Exchange will trade same shares as B3, CEO clarifiesfor example, including shares of Vale and Petrobras.
- what is the benefit? The CEO said in an interview with the media that the exchange’s latest technology will enable faster and more efficient order execution, thereby reducing market transaction costs.
What regarding in an enterprise scenario?
The United States set a new record in just one week
US investors had a quiet week – markets closed early on Tuesday and remained closed on Wednesday. Despite the shorter session, stocks continued to hit record highs.
What happened this week?
“Payroll”. Friday’s jobs report is the most anticipated signal for investors this week – it is the main indicator of the health of the U.S. job market.
What was disclosed. The growth rate slowed down in June. The number of new job openings increased from 218,000 in May to 206,000 last month.Market analysts expected an even lower figure, despite a loss of dynamism in the job market. The unemployment rate rose to 4.1% from 4.0%.
read. Anticipation is growing for the September Federal Reserve (Fed) meeting.
Data like this Friday’s strengthens the case for a rate cut, but it’s important to remember: The U.S. central bank still has another set of activity and inflation indicators to assess before its September meeting.
predict. The probability of a new round of interest rate cuts in September has risen sharply in one week, from 64.1% to 77.6%. According to the CME FedWatch tool.
What else is happening on the international stage?
Bitcoin melts more than 20%
Experts have always warned regarding the volatility of cryptocurrencies. But when these big moves happen, they always come as a surprise and make headlines.
That’s what’s happening with Bitcoin. Over the course of a month, the market’s largest cryptocurrency is down 20.6%, but it’s up 27.5% over the year, outperforming major asset classes that investors typically have exposure to.
How to explain this movement?
In a report this week, BTG Pactual lists some explanations:
- Natural Price Modifiers: After a long period of appreciation, the downward trend is seen as a natural phenomenon. During the year, the RMB appreciated by nearly 70%.
- Macroeconomic scenario: Investor risk appetite appears to have declined in recent weeks, consistent with a prolonged period of rising U.S. interest rates. This waning interest appears to be evidenced by activity from institutional investors, which have withdrawn around $1 billion since June 10.
- Sales pressure: According to professional news reports, a large number of Bitcoin holders are getting rid of their cryptocurrency – or may do so soon. Watch for the following actions:
How has this week impacted your investments?
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