Ibovespa, the benchmark stock market index in Brazil, rose 0.84% to 85,087.86 points Monday after the United States adopted a softer tone in its trade complaints against China. News that Finance Minister Henrique Meirelles would step down from his post to try a presidential bid created uncertainty and weighed on local markets.
“The markets have rebounded from Thursday and Friday. There have been reports that China and the United States have resumed negotiations, cooling their trade war. Here the political and electoral scenario begins to pick up,” said Vitor Suzaki, an analyst at Lerosa Investimentos.
According to Codepe Corretora chief economist Jose Costa, Meirelles’s departure initially brought uncertainty to the market, which speculated on who would be his replacement.
“Probably, Meirelles will be Temer’s vice. These would be the most pro-market candidates,” Costa said.
Ibovespa’s highlight was Eletrobras’ share, which rose 7.08%, with expectations for its quarterly results and the announcement of a voluntary dismissal program that could bring annual savings of R$ 890 million to the company.
Magazine Luiza shares rose 5.47%, while Cyrella shares rose 4.19%. At the negative end, BRF shares fell 2.42%, CCR shares lost 1.82%, and Cielo’s shares dropped 1.68% after the Central Bank’s unprecedented change in the debit card rate.
Also, the Federal Regional Court of 4th Region dismissed the last appeals made by the defense team of former President Luiz Inacio Lula da Silva, a decision that could block the politician from running for this year’s elections. According to Suzaki, such a move was well regarded by the market.
“The point is that now there are 13 or 14 pre-candidates, it is difficult to project, and by August the index should operate with volatility,” said the analyst.
For Costa, Lula’s exit would be “positive” for the electoral scenario once it would “force” the population to vote for a center-right candidate with a reformist profile.
For Tuesday, both analysts expect a bullish trading day at the Ibovespa.
The locally traded U.S. dollar closed down 0.42%, traded at R$ 3.305, on a day of adjustment in the global market and softer statements by the U.S. regarding its trade war against China.