2018.06.0909:03:00UTC+00BRAZIL: Ibovespa Falls With Vale, USD And Political Uncertainty

Ibovespa, the benchmark stock index in Brazil, closed 1.23% lower at 72,942.07 points Friday on a day marked by volatility and a 5.5% deceleration of the locally traded U.S. dollar against the Brazilian real.

That brought relief to part of the market, but weighed on Vale (-6.4%) and Suzano (-9,54%), which pulled the index down. In the week, the Ibovespa accumulated a 5.9% drop.

"Vale and the exporters fell sharply with this return of the dollar, while Suzano and Vale together took 870 points from the index. Considering that it fell 1.1 thousand points, they contributed a lot to the negative movement of today", said Ivan Kraiser, manager at Garin Investimentos.

The external scenario of greater risk aversion mixed with Brazilian political uncertainty continues to bring downward pressure on the Ibovespa.

"The level of political uncertainty remains. There is no clear electoral scenario, and that should end up bringing an adjustment to the Ibovespa in dollars," said Platinum Investimentos partner Rafael Gonzalez.

BRF shares lost 7.48% after China imposed an antidumping tariff on imported poultry from Brazil. The shares Smiles (+ 7.25%) and Kroton (+ 6.72%) rose sharply.

Meanwhile, the locally traded U.S. dollar closed with a 5.5% devaluation, at R$ 3.7090. That was the biggest drop since October 13, 2008, when it fell by 7.30%. Today, the local FX market was influenced by three operations by the Central Bank, trading of 83,800 traditional currency swap contracts, and injecting US$ 4.19 billion into the market.

For Monday, Kraiser sees the possibility of a high for the Ibovespa, tracking the fall of the locally traded U.S. dollar to levels lower than R$ 3.7. For Platinum Investimentos, however, there is still downward pressure on the index, mainly due to the publication of Datafolha's poll on Sunday, which may create political noises to the market.