Stock markets today: Wall Street opens lower and Ibovespa follows a negative tone; dollar approaches R$5

AGONY PASSENGERS: IT’S DIFFICULT TO HAVE A SEQUENCE OF GOOD DAYS IN BRAZIL

This week confirmed the trend of reducing interest rates in the main global economies, exemplified by movements in Switzerland, which reduced its interest rate by 25 basis points to 1.50%, in Brazil, with a cut of 50 points to 10 .75%, and in Mexico, which reduced its rate by 25 points to 11%.

At the same time, the Bank of England, the US Federal Reserve and the People’s Bank of China chose to keep their rates stable.

However, it is anticipated that the next step for these institutions will be to reduce rates, in line with the disinflation cycle.

Despite the optimism in Brazil in response to the flexible (“dovish”) stance adopted by Jerome Powell during his press conference on Wednesday, we were unable to sustain the positive atmosphere.

Asian stock markets faced a sharp decline on Friday, with Chinese markets experiencing the biggest losses, influenced by concerns about potential new adverse regulations both domestically and internationally.

An initial rebound in Japan’s Nikkei 225 was tempered by strong inflation data.

These regional dynamics have led Asian markets to largely disregard the continued gains seen in US markets.

However, this morning saw a return to optimism in European markets and US futures.

In contrast, commodities, including oil and iron ore, performed negatively.

Seeing…

00:52 — Tax issues

On Thursday, the Ibovespa registered a drop of 0.75%, closing at 128,158 points, diverging from the positive trend observed in the main Wall Street indices.

The decline in the Brazilian index was led by the fall in share prices of large companies, such as Petrobras, Vale and the country’s main banks.

This Friday, the fiscal report for the first two months of the year is expected to be released, which should include a decision on the possibility of restricting government spending.

Yesterday, it was revealed that federal revenue until February 2024 increased by 8.82% in real terms compared to the same period of the previous year, reaching R$467 billion, the highest value for the period since the beginning of the historical series.

Despite February showing lower revenue than January, the numbers continue to show strength, marking the best February on record.

Given the increase in tax revenue at the beginning of the year and after revisiting INSS spending, the Brazilian government is outlining a budget reduction of up to R$3 billion.

Initially, an adjustment need was estimated ranging between R$5 billion and R$15 billion, however, the collection of resources brought a margin of relief greater than projected.

It is important to note that this measure does not constitute a contingency (scarcity of resources), but rather a budgetary blockage, resulting from a surplus in the expenditure limits.

However, the budget discussion is far from a definitive conclusion, and there may be an announcement of a review of the fiscal target, perhaps adjusting it to a deficit of 0.25% of GDP, as early as May.

The Central Bank is also expected to address the issue of fiscal risk in its minutes next week, providing clarifications on the “domestic uncertainties” previously mentioned in Super Wednesday.

As I have already pointed out, given the lack of a consistent fiscal anchor, it is natural for the BC to adopt a cautious stance, assuming the role of monetary anchor in the current economic context.

01:47 — It keeps rising

In the United States, driven by a growing risk appetite among investors, shortly after the most recent Federal Reserve meeting, the S&P 500 reached its twentieth annual record, highlighted by advances in the industrial and banking sectors.

The reason for such optimism remains: the calm communication from Jerome Powell, president of the Federal Reserve, after the monetary policy meeting in March.

In summary, the relief in the market results from the continuation of three interest rate cuts in the Fed’s planning for 2024.

Furthermore, recent information on residential property sales and unemployment benefit claims corroborates the perspective already outlined.

Notably, home sales revived last month, exceeding expectations for February, while preliminary unemployment claims numbers indicate that layoffs remain at historically low levels.

This data is in line with the Fed’s recognition of the robustness of the American economy, even suggesting the emergence of a new growth trend, potentially more optimistic than expected.

Today, the focus turns to the University of Michigan consumer sentiment index for March, particularly inflation expectations for next year.

02:38 — Problems with Apple

Apple finds itself on the threshold of a significant legal confrontation. The US Department of Justice, together with 16 state attorneys general, filed a lawsuit against the technology giant, accusing it of adopting monopolistic practices.

The process, extensive with its 88 pages, compiles a series of complaints that echo the recurring criticisms of the company.

The document highlights accusations against Apple’s App Store for imposing high fees and, allegedly, limiting streaming services and the creation of “super applications” by competitors.

Another point of controversy is the claim that Apple deliberately makes it difficult for iPhone users to use third-party products, along with several other issues.

Apple, in turn, refuted these accusations.

The course of this legal process could last for years until a conclusion is reached on the need for Apple to modify its commercial practices.

This process marks an important step by the DOJ, which is committed to combating corporate monopoly, in its campaign having already taken legal action against other large technology corporations such as Amazon, Google, and Meta for anti-competitive practices.

In addition, Apple faces inquiries in the European Union over its adherence to the Digital Markets Law, an investigation that also targets Google. However, this is not the first time that Apple has found itself under regulatory investigation, nor will it likely be the last.

03:24 — The oil giant

For the past six years, the United States has maintained its position as the world’s largest crude oil producer.

In 2023, American crude oil production, including condensates, reached a daily average of 12.9 million barrels, surpassing the previous record, both nationally and globally, of 12.3 million barrels per day set in 2019.

In December 2023, average monthly production in the US reached a new historic high, at more than 13.3 million barrels per day.

Given the magnitude of this production, it is unlikely that another country will surpass the American record for crude oil production in the near future, as no other nation has achieved a production capacity of 13 million barrels per day.

This leadership gives the United States significant geopolitical power and influence, solidifying its position as the leading global energy force.

Saudi Aramco, Saudi Arabia’s state-owned company, recently scrapped plans to expand its production capacity to 13 million barrels per day by 2027.

Together, the United States, Russia and Saudi Arabia were responsible for 40% of global oil production in 2023, corresponding to 32.8 million barrels per day.

These three countries have led the world in oil production since 1971, with the top spot alternating between them over the last five decades.

In contrast, the next three largest producers – Canada, Iraq and China – together produced 13.1 million barrels per day in 2023, an amount only slightly higher than the production of the United States alone.

This advance is largely due to the development of the shale industry in the USA and recent geopolitical impacts, which have pushed the country towards increasing energy autonomy.

02:19 — Defusing the bomb

For a long period, European leaders were hesitant to impose restrictions on imports of agricultural products from Russia, worried about the possible rise in global food prices and the negative impact on developing countries, where inflation and product shortages could generate discontent. .

However, global food prices hit their lowest point in three years in January.

As a result, Europe intensified its imports of Russian cereals, exceeding volumes prior to the invasion of Ukraine. This trend may be about to take a turn.

The European Union is considering a plan to impose high tariffs on cereals, oilseeds and related products imported from Russia and its invasion ally Belarus.

This action, while not expected to significantly affect the Russian economy on a large scale, will be beneficial to European farmers by reducing competition.

Furthermore, this move carries important symbolic meaning for European leaders who wish to sever the EU’s remaining economic ties with the Kremlin.

Therefore, in the coming months, we may see new volatility in food prices.