Ibovespa falls 2% and dollar reaches R$ 5,52

Infomoney - After spending much of this Monday (4) with a drop of more than 3%, the Ibovespa eased losses in the final stretch of trading following the recovery of indices abroad, but did not avoid losing the 80 thousand points.

The tense political climate at the national level weighed heavily here after President Jair Bolsonaro participated in a demonstration in Brasília (DF) against the Supreme Federal Court (STF) and Congress. In addition, there was also a market adjustment to the performance of the ADRs last Friday, when the stock exchange was closed. On that occasion, the Dow Jones Brazil Titans 20 fell by more than 4%.

Abroad, the day was marked by tension between the United States and China after US President Donald Trump accused the Chinese of hiding the coronavirus epidemic in order to stockpile medical supplies and equipment to combat the disease, while US Secretary of State Mike Pompeo stated that there was "strong evidence" that Covid-19 was created in a laboratory in Wuhan.

Pompeo's statements contrast with information from American intelligence, which last week stated that Covid-19 is natural and was not developed through biotechnology.

As a result, the benchmark stock index closed down 2,02%, at 78.876 points, with a trading volume of R$ 19,205 billion. Meanwhile, the commercial dollar rose 1,55%, quoted at R$ 5,5210 for buying and R$ 5,5224 for selling. The June futures dollar registered an increase of 0,99%, to R$ 5,551.

In the futures interest rate market, the DI (interbank deposit rate) for January 2022 rose 4 basis points to 3,66%, while the DI for January 2023 increased by 10 basis points to 4,91%. The contract for January 2025 advanced 8 basis points to 6,63%.

Abroad, the Dow Jones and S&P 500 indexes closed slightly higher after spending the day in negative territory. The Nasdaq, in turn, was already rising and gained momentum, closing with an increase of more than 1%.

Meanwhile, European stock markets fell more than 3% after being closed for the holiday. The exception was the United Kingdom, which opened on Friday and remained practically stable today. In Asia, it's a holiday in China and Japan, but Hong Kong closed down 4,18%.

Also noteworthy are the efforts of countries that are beginning to ease lockdown measures amid fears of a second wave of the coronavirus pandemic.

In Italy, 4,4 million people are returning to work today in what is called "phase 2" of the economic reopening, of which 2,8 million are in the north of the European country.

Focus Report

The financial market has once again revised its projections for the Selic rate. According to the Focus report released today, a cut in the basic interest rate of half a percentage point is expected at the Copom meeting this week, bringing the Selic rate from the current 3,75% to 3,25% per year.

At the next meeting, in June, the expectation is for another cut, also of half a percentage point, which should bring the rate to 2,75% per year – remaining at this level until December. Previously, the survey showed an expectation that the Selic rate would end the year at 3,00%.

The median of projections for Brazil's Gross Domestic Product (GDP) performance has fallen for the 12th consecutive time, reflecting an even more pessimistic outlook for this year. Economists now foresee a contraction of the Brazilian economy of 3,76% in 2020, compared to the previous expectation of a 3,34% decline.

Already in 2021, the market expects activity to grow by 3,20%, above the previous expectation of 3,00% expansion.

For the Broad National Consumer Price Index (IPCA), the projected increase was cut for the eighth consecutive time, this time from 2,20% to 1,97% in 2020. There was also an adjustment in the projection for inflation in 2021, from 3,40% to 3,30%.

Regarding forecasts for the foreign exchange market, the Focus report revealed that the estimate for the dollar rose from R$ 4,80 to R$ 5,00 this year, while the expectation for 2021 rose from R$ 4,55 to R$ 4,75.