What to expect from the market this week?

The week was marked by a drop in the Ibovespa, discussions on the fiscal agenda and strong fears about the US interest rate, even more so after the SVB announcement. Yes! O financial market has already started the month of March with a lot of agitation.

Overseas, investors are (a lot) watching interest rates in the United States, and here in Brazil, nothing is talked about other than the fiscal framework, inflation and the results of the retail giants, Magazine Luiza (MGLU3) and Via (VIIA3).

Fixed income investments are gaining more and more strength, as variable income takes more of the economic factors. Events change at full speed and shake the financial market on all sides.

What happened last week?

Remember the main events that marked the financial market in the last week, thinking about both the international and Brazilian markets

  • United States and the external scenario

The United States started the last week with a positive sign and the highlight was the announcement by the Chinese authorities of the new growth target of the country’s economy of 5% in 2023, after the end of the Covid-zero policy that extended for all these years .

The speech by Jerome Powell, the chairman of the Fed, the US central bank, also raised concerns about the increase in interest rates. He said they are prepared to increase the pace of increases and raise more than expected, if the economic data justified the measures.

According to the CME (United States Commodity Exchange, based in Chicago), market agents work with a 63% chance that the Fed will raise interest rates by 0.5 percentage points at its next meeting.

In Asia, however, it was not much different, even with caution, local stock markets closed lower. Much of what impacted other markets is also due to crise do SVB Financial Group which lost $2 billion after a larger-than-expected decline in deposits.

Oil ended up falling sharply after a good period of growth and China’s trade balance contributed to this. Being as a result of the US scenario, with oil operating at lows, while iron ore closed yet another session high.

  • Brazil and political uncertainties

The discussion on top of the new spending ceiling continues to be a point of attention for investors. The market even reacted positively, but it’s a subject that dragged on all week.

Perhaps the government can spend above inflation, but the market is worried even if it will have fiscal responsibility and is waiting for the next chapters. It is worth remembering that the stock market started the month on a high because of the banking sector and airlines. For example, Gol’s debt financing and possible debt restructuring (GOLL4) boosted the branch’s shares and had a positive impact.

As oscillation is part of the financial market, the Ibovespa was falling in recent days, as well as commodities, driven by the performance of Vale and Petrobras.

We are even in the process of disclosing the fourth quarter of 2022, and this affects the entire market, even more so in the consumer sector.

So much so that Magazine Luiza (MGLU3) recorded a net loss of BRL 35.9 million in the 4th quarter of 2022, against a net profit of BRL 93.0 million in the 4th quarter of 2021. Via (VIIA3) disclosed in the 4th quarter of 2022 a net loss of BRL 163 million, which was even lower than expected, expanding profit of BRL 29 million in the same period of 2021.

The week ended with the release of the IPCA. The Extended National Consumer Price Index, which measures official inflation in the country, was 0.84% ​​in February, and the accumulated 12-month index was 5.60%.

What to expect from the market this coming week?

The week arrives with the need for increased attention. It will be a week for disclosing several indicators, such as retail sales and industrial production in the United States, and here in Brazil, the announcement of the GP-10.

The new market information leaves investors prepared for possible surprises. Therefore, do not expect less than more volatility and uncertainty, thinking about Brazilian politics and US monetary policy, the fear is very great and we can expect a tense week.

The last few days have been good for some sectors, civil construction, telecommunications, retail, for example. The area of ​​mining and energy suffered a little. This mixed behavior on different fronts is something worth paying attention to.

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