The publication of the April IPCA is in the sights of the local market. Also the minutes of the last monetary meeting of the European Central Bank (ECB), data on consumer sentiment and inflation expectations in the United States and speeches by five Federal Reserve directors should guide adjustments in financial assets throughout this Friday.
Exterior
Appetite for risky assets is amplified in Europe and New York this morning, with stock markets rising, Treasuries interest rates falling and the dollar close to stability against other major currencies after higher-than-expected US unemployment benefit data reinforced the chance that the Federal Reserve (Fed, the US central bank) will start reducing interest rates in the second half of this year. There are expectations for US indicators and speeches from Fed officials.
In Europe, stock markets are also benefiting from UK GDP growth of 0.6% in the first quarter of 2024, more than expected, overcoming the recession it entered in the previous quarter. The pound gains strength against the dollar, while the euro fluctuates close to stability and the dollar rises against the yen amid expectations still due to the minutes of the ECB’s last monetary meeting.
In Asia, the Hong Kong Stock Exchange rose more than 2%, to its highest level since August last year, driven by a Bloomberg report that China is considering exempting individual investors from paying taxes on dividends obtained from Hong Kong shares purchased by through the ‘Stock Connect’ trading scheme. However, caution ahead of China’s inflation data marked business on Chinese stock exchanges.
Brazil
The positive external climate and the rise in oil and iron ore could support the Ibovespa, in addition to the shares of Petrobras and Vale. Investors should review a series of balance sheets published last night and also the April IPCA. The fall in Treasury yields could alleviate the bad mood in interest rates and also in the exchange rate yesterday, resulting from the divided Copom score.
An agreement between the government and Congress on the exemption of companies’ payrolls must also be welcomed. The Minister of Finance, Fernando Haddad, announced yesterday that he will respect the decision of the National Congress to maintain the payroll tax relief policy until 2027, but establishing a kind of “phase out”, that is, gradual tax relief from 2025, with increase of ¼ of the rate each year.
The economic team will, however, need to send a proposal to Congress to compensate for the loss of revenue from the tax exemption this year, in compliance with the Fiscal Responsibility Law (LRF). The impact of the measure is around R$10 billion, totaling R$22 billion if the exemption from municipalities’ payroll is taken into account. The Minister of Institutional Relations, Alexandre Padilha, stated that the expectation is that the Federal Supreme Court (STF) will give a deadline for the government to present the source of compensation for the payroll tax relief. Haddad, also said that he will meet next Monday, the 13th, with the mayors to discuss the tax relief for municipalities and that, if there is perseverance, before 2027 Brazil will have a new global model of tax collection at companies.
*State Agency
