Ibovespa has the worst week since March and closes October in...

SÃO PAULO – The Ibovespa closed down on Friday (30) and consolidated a 0.69% decline in October, the month in which the index rose 7.73%, hitting 101,917 points. During the week, the Ibovespa fell 7.22%, at its worst performance since the period between 16 and 20 March.

The turnaround started last Friday (23), the day on which after four consecutive highs the benchmark fell 0.65%.

At the time, a string of good signals from Congress and the US government raised expectations for the approval of a trillion-dollar stimulus package against the economic impacts of the coronavirus. Until Thursday, what Mayor Nancy Pelosi and Treasury Secretary Steven Mnuchin said was that a deal was “almost there”.

However, the weekend came and the negotiations cooled down. Yesterday, U.S. President Donald Trump said the stimulus would come out after the November 3 presidential election.

To make matters worse, the second wave of the coronavirus, until then mere fear, became a reality throughout the week. On Tuesday, Italy announced restrictions such as the closure of bars and restaurants, causing protests.

On the fourth, it was Germany and France’s turn to approve new lockdowns and restrict trade and movement of people for a month, demolishing more optimistic projections of a V recovery in these economies after the great panic of March.

Thanks to the new restrictions, the data of the Gross Domestic Product (GDP) of the euro zone and of several European countries released on Friday ended up being seen as old news by the market today.

This Friday, the Ibovespa fell 2.72%, to 93,952 points, the lowest closing level since September 29, when the index ended the session quoted at 93,580 points. The financial volume traded in the session today was R $ 30.327 billion.

Meanwhile, the commercial dollar fell 0.47% on the day, to R $ 5.737 for purchases and R $ 5.738 for sales. In the month, the American currency appreciated by 2.17% against the real, and in the week the appreciation of the dollar was 1.97%. The US dollar maturing in December was down 0.7% to R $ 5.744 in the after-market.

The slightly greater stability of the exchange rate in relation to the Stock Exchange at this time reflected the fight between bought and sold on Ptax’s formation day. In the intraday, the US currency reached R $ 5.80.

In addition to fears related to Covid-19, the trading session was also marked by a dismantling of positions before the US presidential election on Tuesday and a decline in the shares of technology companies in the USA.

Apple’s shares plunged 5.6% after the company reported an almost 20% decline in iPhone sales and Amazon’s shares fell 5.5% even after strong third quarter figures.

The country also faces new records in daily coronavirus infections. The seven-day moving average reached the unprecedented mark of 76,590 new cases per day, according to Johns Hopkins University.

In Brazil, Economy Minister Paulo Guedes again criticized the Brazilian Federation of Banks (Febraban) on Thursday, this time for allegedly funding a study that would support “spending minister”.

According to information released by the press, Guedes has criticized Minister Rogério Marinho, Regional Development, behind the scenes, saying that Marinho works to increase public spending and disrespect the rule of the ceiling.

It is worth mentioning that, on Monday, the Brazilian market will close on the holiday of the dead, without being able to react to eventual developments of Covid-19, which again breaks a record in the USA on the eve of next week’s presidential election.

In the future interest market, the DI for January 2022 fell three basis points, to 3.45%, the DI for January 2023 was stable, at 5.04%, the DI for January 2025 was down by one point base, at 6.77%, and the DI for January 2027 registered a positive change of one base point, at 7.57%.

Regarding eurozone GDP, the economy of the single currency bloc grew 12.7% in the third quarter of 2020 compared to the second, according to preliminary data released on Friday by the official European Union statistics agency, Eurostat .

The result exceeded the expectation of analysts consulted by The Wall Street Journal, who foresaw an increase of 9.4% in the period.

In the annual comparison, the bloc’s GDP contracted 4.3% between July and September, much less than the 7% drop projected by the market. In the second quarter, eurozone GDP fell by 11.8% compared to the previous three months, given the effects of the new coronavirus pandemic.

Sales drop

The newspaper State of S. Paulo today highlighted the drop of up to 10% in sales of cash and carry chains in recent weeks. Citing the market director of Apas (Associação Paulista de Supermercado), the newspaper states that supermarket sales have also fallen.

According to the report, the movement is due to the surge in food inflation. In October, the inflation preview, measured by the IPCA-15, reached 0.94%, more than double the inflation registered in September and the highest increase for the month in 25 years. The highlight is beef, which rose by 4.83%, soy oil, with a rise of 22.34% and rice, with a rise of 18.48%.

Alongside President Jair Bolsonaro (without a party) in his weekly live on Thursday, Agriculture Minister Tereza Cristina said that new crops should reduce the price of rice by January.

On Wednesday, the Central Bank decided to keep the Selic interest rate at a record low of 2%, despite the acceleration of inflation. The movement is in line with the expectations of economists.

Another factor cited by the newspaper as responsible for the drop in purchases is the reduction since September from R $ 600 to R $ 300 in emergency aid. Now, the government seeks to articulate with Congress ways to create a new income transfer program, replacing aid and Bolsa Família. The challenge is to do so without breaking the spending ceiling.

In addition, Estadão said that the government has been considering proposing a benefit specifically aimed at workers laid off during the covid-19 pandemic, but who did not have access to unemployment insurance or emergency aid.

The benefit would be a counter-proposal to the demand from union centers for the extension of unemployment insurance in two installments, which would cost up to R $ 16.7 billion. According to the newspaper, economic technicians preliminarily estimate the number of workers who lost their jobs between March 20 and September 30 at 256,000.

Guedes versus banks

During a congressional hearing on Thursday (29), Economy Minister Paulo Guedes stated that Febraban (Brazilian Federation of Banks) would be funding studies so that “spending minister” could weaken him.

“Febraban is a very honorable lobby, the lobby is very fair. But it has to be written on the forehead, ‘banking obby’, which is for everyone to understand what it is about. Including financing studies that have nothing to do with the defense of bank transactions. It is important to say that. Financing spending minister to see if a ceiling is pierced, to see if the other side collapses ”.

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Guedes did not mention any specific name. But in general, news outlets interpreted that he seemed to make a veiled reference to the Minister of Regional Development, Rogério Marinho. While Guedes defends respect for the spending ceiling, Marinho defends financing public works and increasing spending to boost the economy’s recovery after the covid pandemic.

Hours after the minister’s speech, the UOL portal published a report stating that he had access to a copy of the contract for the study mentioned by Guedes. It would be financed by Febraban and 10 other entities, and should be carried out by UNDP (United Nations Development Program), in a cooperation agreement with the Ministry of Regional Development.

The cost is R $ 20 million, and the result should be a set of proposals for economic recovery after the pandemic, and the conclusion should be within two years. It should bring new proposals for business models, with space for public and private investments and reduction of inequalities.

He also criticized banks for opposing the creation of a new tax on digital transactions, which has been compared to the old CPMF. Guedes has been trying to create a tax of this type since 2019, a kind of compensation for the extinction or reduction of the contribution of 20% of companies on the payroll to Social Security.

In mid-October, the minister had already stated that the banks themselves would be charging a kind of tax of the type, in reference to the TED and DOC rates, charged on transactions.

“Febraban is the one that most subsidizes and pays economists to advise against this tax, but Febraban is doing this because it wants to drink this water that banks drink. Check out the transfers you made last month. Banks charge 2%, 1%, 3%. The exception is big customer. When he has R $ 10 million [na conta] he doesn’t pay. The bank charges 10 times more for TED than the tax we are demanding for digital traffic, ”he said.

Corporate Radar

Suzano Papel e Celulose reported a net loss of R $ 1.157 billion in the third quarter of 2020. The amount represents a 66.54% decrease in comparison with the net loss of R $ 3.460 billion in the same period of the previous year. The data were released on Thursday, 29, in a balance sheet sent to the CVM.

The company also reported a net loss attributable to the controlling company’s shareholders of R $ 1.160 billion. The amount represents a drop of 66.47% in comparison with the net loss attributed to the controllers of R $ 3.460 billion in the same period of the previous year.

Lojas Americanas recorded consolidated net income of R $ 49.9 million in the third quarter of 2020, an increase of 3.5% in relation to the same period in 2019. In 9 months, the retail chain accumulates a loss of 6.4 million , compared to a profit of R $ 107.4 million last year.

Higher highs

Higher casualties

The B2W e-commerce group recorded a loss of approximately R $ 36.8 million in the third quarter compared to a loss of R $ 102.5 million in the same period of 2019, or a drop of 64.1%, with strong sales growth in wake of quarantine measures against Covid-19.

The corporate software producer Totvs increased its adjusted net profit by 3.8%, to R $ 82.5 million in the third quarter of 2020.

The company, which tries to buy rival Linx (LINX3), saw its adjusted EBITDA rise 34%, to R $ 161.4 million, above the R $ 140.8 million expected, on average, by analysts, according to the compilation of Refinitiv.

Fleury increased by R $ 132.1 million in the third quarter, an increase of 45% in the annual comparison. The company improved its financial and operating indicators in the third quarter, as the gradual easing of social isolation allowed the diagnostic medicine group to expand consulting revenues and resume staged procedures during the peak of Covid-19.

Transmissão Paulista recorded a slight drop of 2.4% in net profit in the third quarter compared to the same quarter last year, totaling R $ 400.6 million.

“The readjustment of the Permitted Annual Revenue (RAP) for the 2020/2021 Cycle impacted the result due to the accounting for the Adjustment Portion (PA)”, he highlighted.

Itaú reported that Milton Maluhy Filho will replace Candido Bracher as CEO in February. During the next 3 months, Maluhy and Bracher will lead the transition process.

(Com Reuters e Bloomberg)

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