The Ibovespa fell almost 3% in a week marked by monetary policy decisions in Brazil and the United States (Image: REUTERS/Amanda Perobelli)
In a busy week for monetary policy decisions, the Ibovespa (IBOV) reacted to opposing interest rate decisions in Brazil and the United States.
Here, the Monetary Policy Committee (Copom) unanimously decided to raise the Selic rate by 25 basis points, to 10.75% per year, kicking off a 'mini-cycle' of interest rate hikes — which should continue, at least, until January 2025, according to analysts.
In the statement, the Committee stated that “the scenario, marked by resilience in activity, pressures in the labor market, a positive output gap, rising inflation projections and unanchored expectations, demands a more contractionary monetary policy”.
On the domestic scene, the market continued to monitor new economic data.
Among them, federal government revenues increased by 11.95% in real terms in August compared to the same month of the previous year, totaling R$201.622 billion — the best result for the month in the historical series that began in 1995, according to data from the Federal Revenue Service.
From January to August, revenues totaled R$1.731 trillion, 9.47% higher than in the first eight months of 2023, after adjusting for inflation. This result also represents a record for the period.
Finally, Ibovespa (IBOV) closed trading last Friday (20) at 131,065.44 points and accumulated a drop of 2.84% in the week. The drop was driven by local caution, with high interest rates remaining for longer.
The spot dollar (USBRL) ended the week at R$5.5209, down 0.83% in the last five sessions.
Check out the biggest rises and falls of the Ibovespa between September 16 and 20:
| CODE | NAME | WEEKLY VARIATION |
| AZUL4 | Azul PN | 6,26% |
| SMTO3 | Saint Martin | 3,47% |
| PRIO3 | PRIO IS | 2,05% |
| BRFS3 | BRF ON | 1,82% |
| TIMS3 | Tim ON | 1,79% |
| RAIZ4 | Raízen ON | 1,62% |
| RADL3 | Raia Drogasil ON | 1,01% |
| VIVT3 | Telefonica Brazil ON | 0,78% |
| ABEV3 | Ambev ON | 0,24% |
| SBSP3 | Sabesp ON | 0,14% |
Biggest falls in Ibovespa
On the negative side, Brava Energia led the week's losses.
BRAV3 shares fell more than 10% in the session last Thursday (19) alone after the company informed the market that the expectation of return of production from the Papa Terra field was updated to the beginning of December 2024.
According to analysts at Bradesco BBI and Ágora Investimentos, the expectation was for a faster resumption of operations, which justifies the market's negative reaction.
Cyclical stocks also fell with the increase in the Selic rate and the prospect that Brazilian interest rates will remain higher for longer.
Check out the falls in the main Brazilian stock market index this week:
| CODE | NAME | WEEKLY VARIATION |
| BRAV3 | Brava Energy IS | -17,63% |
| ASAI3 | Assai ON | -12,50% |
| MGLU3 | Magazine Luiza ON | -10,78% |
| LET'S GO3 | Let's go ON | -10,25% |
| COGN3 | Cousins ON | -10,20% |
| CVCB3 | CVC ON | -10,10% |
| YDUQ3 | Yduqs ON | -8,98% |
| EZTC3 | EZTEC ON | -8,68% |
| LWSA3 | LWSA ON | -8,59% |
| MRVE3 | MRV ON | -7,85% |
Exterior
Abroad, the market spotlight was focused on the monetary policy decision.
The Federal Reserve (Fed) cut interest rates to 4.75% to 5.00%. The magnitude of the reduction was in line with market expectations, according to CME Group's FedWatch tool.
This was the first reduction since March 2020 and marks the beginning of the monetary easing cycle in the United States.
Along with the decision announcement, the BC released the points chart (“dot plot“), updated quarterly. In it, nine directors see the interest rate at 4.40% by the end of 2024 – which opens a window for two 0.25 pp cuts in the next FOMC meetings.
That is, the Fed must bring the interest rate (Fed Funds) in the range of 4.25% to 4.50% by the end of the year, higher than they predicted in June, as inflation approaches the 2% target and unemployment rises.
During the press conference, the president of the US Central Bank, Jerome Powell, said that the projections for the trajectory of the cut in the basic interest rate do not imply an urgent process.
The S&P 500 rose 1.3% this week — its fifth consecutive week of gains. The Dow Jones and Nasdaq both rose 1.5% over the last five trading sessions.
Furthermore, the Bank of England (BoE) kept interest rates unchanged at 5.00% per year.
The Bank of Japan (BOJ) also kept interest rates steady. The central bank governor signaled there was no rush to raise borrowing costs further.
What to expect for next week?
Next week, the market should remain focused on the fiscal scenario.
A press conference on the Bimonthly Report on Primary Revenues and Expenditures for the 4th two-month period is scheduled for Monday (23).
On Wednesday (25), investors should react to the Broad National Consumer Price Index 15 (IPCA-15), which measures the preview of the inflation officer of the Brazil. On the same day, the Central Bank releases the Open Market and External Sector Statistics.
On the international agenda, the week will also be full of data, such as the Personal Consumption Expenditure Price Index (PCE) — the Fed's inflation benchmark — and the GDP preview.