BRAZIL: Ibovespa Closes Slightly Down On Political And Fiscal Issues

(RTTNews) - After rising during the morning, boosted by the iron ore appreciation abroad, the Ibovespa reversed its course and closed slightly down (-0.11%), at 68,634.64 points on Monday.

The benchmark stock index in Brazil was affected by investors' concerns about the fiscal issue and the complaint filed by the country's Attorney General's Office (PGR) against the Senator Romero Jucá (PMDB-RR).

Brazil's PGR filed a complaint against Jucá in the framework of Operation Zelotes. Closely linked to President Michel Temer, Jucá is under investigation for allegedly favoring Grupo Gerdau.

Analysts also point out that the increase in the public account's deficit in Brazil continues to worry and prevent Ibovespa from further advancing.

"The market is still waiting for the pension reform bill and many players are afraid that the political reform may come before," said Toro Radar analyst Bruna Moura.

Earlier, iron ore prices abroad helped Vale's shares (VALE3 +1.01%, VALE5 +0.65%). Meanwhile, oil futures prices fell more than 2%, affecting Petrobras shares (PETR3 -1.70% PETR4 -1.91%). Cemig's shares (CMIG4 -1.98%) fell under the impact of a court ruling suspending the auction of hydroelectric plants that would help to raise R$ 11 billion (US$ 3.48 billion) to the government.

The locally traded US dollar rose 0.69%, closing at R$ 3,1690, influenced by fears regarding the compliance with the Brazilian fiscal target triggered by the ruling regarding Cemig. The launch of discussions on the U.S. domestic debt also influenced the currency.

For the next few days, Bruna Moura says that the Ibovespa may follow "close to neutrality" by observing whether political reform may further delay pension reform, but her view is optimistic for the stock market in the medium and long terms.

Rogério Freitas, an analyst at Florença Investimentos, believes that the short-term can also be positive if the current scenario of greater liquidity abroad persists. He does not rule out, however, profit-taking moves once Ibovespa has already accumulated a significant appreciation in the last few weeks and the fiscal issue continues to bring uncertainties.