Stocks fall on data from China and ahead of corporate results in the US; PGI-10 in Brazil and other highlights

New York futures indices are trading at lows, in the same direction as the close of Asian markets, except for Japan’s Nikkei, on Tuesday (17), despite a series of economic data from China that surprises positively and awaits the results of companies in the States United.

China’s gross domestic product (GDP) grew 3% in 2022, marking one of the slowest growths in decades, but above Refinitiv’s consensus which projected a 1.8% year-on-year increase.

Investor attention is turning to corporate finance as earnings season gets underway. Goldman Sachs and Morgan Stanley will release their numbers before markets open, followed by United Airlines after market closes.

Ibovespa today: watch the market highlights live this Tuesday

Investors around here will be closely following Finance Minister Fernando Haddad’s performance at the World Economic Forum in Davos as fresh clashes over a bigger minimum wage increase between the political wing and the government’s economic team erupt , which raises concerns about the country’s fiscal situation.

In terms of indicators, inflation measured by the PGI-10 in January emerged, lower than expected, rising by 0.05%, compared to the Refinitiv consensus which forecast an increase of 0.30% compared to December last year.

1. World Scholarships

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US futures indices are trading lower on Tuesday morning as the Martin Luther King party returns, with investors awaiting further corporate results.

All three major cash indices are up at the start of the year. The Nasdaq Composite led gains, up 5.9%, as investors bought tech stocks amid growing hopes for a better outlook for growth stocks. The S&P 500 and the Dow are up 4.2% and 3.5% respectively since the start of the year.

Investor attention now turns to the corporate earnings season. Banks took center stage on Friday as investors digested comments on the likelihood of a recession.

See how the futures markets performed:

• Dow Jones Futures (US), -0.15%
• S&P 500 Futures (US), -0.24%
• Nasdaq Futures (US), -0.38%

Asia

Asian markets mostly closed higher as investors digested a number of Chinese economic indicators.

December retail sales in China beat estimates, falling just 1.8% year over year, significantly better than the 8.6% decline predicted by a Reuters poll.

In the fourth quarter, China’s economy grew 2.9% year-on-year, above forecast growth of 1.8%.

Industrial production also rose 1.3% in December, above expectations for a 0.2% increase.

Stocks in Japan reversed, with the Nikkei 225 finishing up 1.28%, leading gains in the region as the Bank of Japan kicked off its two-day policy meeting. The 10-year Japanese Treasury yield continued to test the upper limit of the central bank’s tolerance band.

• Shanghai SE (China), -0.10%
• Nikkei (Japan), +1.25%
• Hang Seng Index (Hong Kong), -0.78%
• Kospi (South Korea), -0.85%

Europe

European markets are trading at an overall low in today’s session, with concerns about the global economy topping the agenda at the World Economic Forum in Davos this week.

Concerns about the direction of the global economy, persistent inflation and sluggish growth are high on the agenda, as is the war in Ukraine.

Consumer price inflation in Germany reached -0.8% from November to December and rose 8.6% year-on-year, in line with consensus Refinitiv had expected a monthly decline of 0.8%, but an 8.6% year-on-year increase.

• FTSE 100 (UK), -0.15%
• DAX (Germany), -0.16%
• CAC 40 (France), -0.20%
• FTSE MIB (Italy), -0.24%

Goods

Oil prices traded in a directionless direction on Tuesday after China posted the weakest economic growth in nearly half a century, while its reopening in late 2022 still buoys hopes of a recovery in the country’s fuel demand this year.

Iron ore prices also eased in today’s session after China’s GDP posted the second worst performance since 1976 as the latest quarter was hit hard by tight Covid-related restrictions and the housing market slump.

Credit Suisse expects iron ore prices to peak at around $130-$140 this year as traders keep their focus on China’s reopening.

• WTI Crude Oil, -0.49%, to $79.47 a barrel
• Brent Oil, +0.46%, at 84.85 dollars a barrel
• Iron ore traded on the Dalian Stock Exchange fell 1.30% to 835.00 yuan, or $123.37

bitcoins

• Bitcoin, -0.35% to $21,226.98 (24 hours ago)

2. Schedule

This Tuesday’s agenda carries inflation as measured by January’s PGI-10. which rose 0.05% in January, below expectations. In the previous month the rate had been 0.36%. With this result, the index accumulates a maximum of 4.27% in 12 months.

Brazil

8am: January PGI-10, up 0.05%, vs. Refinitiv consensus that it was up 0.30% from December

10:30am: Auction of National Treasury Bonds

United States of America

10:30am: Empire State Manufacturing Index

5pm: Speech by Fed Chairman John Williams

6.30pm: API oil stocks

3. Economic news

Tax reform and new tax framework still in the first half

Finance Minister Fernando Haddad (PT) said on Monday that the federal government intends to approve tax reform and a proposal for a new tax framework for the country in the first half of the year.

In his first international trip since taking office to attend the World Economic Forum, in Davos (Switzerland), Haddad said that tax reform “is the mother of reforms” and that the government has decided not to restore tax rates industrialized products tax (IPI) just to signal the commitment to move forward with this agenda.

To journalists, the minister highlighted the two Proposal to amend the Constitution being drafted in the Chamber of Deputies and in the Federal Senate and which fundamentally concern the simplification of consumption taxes – PEC 45/2019 and 110/2019.

Lula: “BB has to take care of the people who need it most”

President Luiz Inácio Lula da Silva demanded on Monday that Banco do Brasil’s new president, Tarciana Medeiros, also take care of “the people who need it most”, in addition to the large companies financed by the institution. “BB finances millions in the agribusiness sector, but in our time it has financed small farmers through Pronaf,” she said, during a swearing-in ceremony at the Centro Cultural Banco do Brasil (CCBB). “It’s not enough to be a public bank, but for the people who run it to have an open mind,” she added.

Amidst praise for the new bank commander, Lula reminded her that BB cannot take losses and called for profitability.

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4. Political news

Lula postpones the trip to relaunch Minha Casa, Minha Vida program

President Lula’s trip to relaunch the Minha Casa, Minha Vida program has been postponed and a new date will not yet be announced, the Civil House of the Presidency of the Republic informed.

The trip was canceled because the houses that would have been delivered by Lula have several structural problems and need renovation works. Of the 4,000 properties ready, only 1,400 would be ready for distribution, according to the portfolio. There are cases of properties contracted out by the Dilma government, but deteriorating over time, never having been distributed for housing. Minister Rui Costa visited the properties of Feira de Santana and Santo Amaro over the weekend and noted the precarious situation of the homes.

Minister includes seized draft in action against Bolsonaro at TSE

Minister of the Superior Electoral Tribunal (TSE) Benedito Gonçalves authorized on Monday (16) the inclusion of the draft seized at the home of former Justice Minister Anderson Torres in an electoral investigation action against former President Jair Bolsonaro.

The request for inclusion was made by the PDT in the process opened in the court last year to determine the legality of Bolsonaro’s meeting with ambassadors to question the fairness of electronic voting.

In the decision, Gonçalves says that the project may be related to the facts investigated in the trial.

covid

Brazil recorded 73 deaths from covid-19 in the last 24 hours on Monday, for a total of 695,461 since the start of the pandemic.

With that, the rolling average of deaths over the past 7 days is 73. Compared to the average 14 days ago, the change was -47%.

In total, the country recorded 23,106 new Covid-19 diagnoses in 24 hours, completing 36,661,526 known cases since the start of the pandemic.

Petrobras informs that it has received the restitution of approximately R$ 456 million, recovered through a leniency agreement with the company UOP LLC – a subsidiary of Honeywell International Inc. – concluded with the Comptroller General of the Union (CGU) and the
Attorney General of the Union (AGU), an instrument that is part of a global resolution that called for coordinated action with the Federal Attorney General (MPF) and US authorities. Petrobras did not have access to the deal.

Oi (OIBR3) has decided to discontinue the disclosure of future performance projections (guidance), including operational and financial projections and estimates published in July 2021, in light of material changes in the Brazilian macroeconomic scenario.

The company also underlines that the projections contained in the Significant Fact of 31 December 2022, regarding the outbreak of discussions with creditors, should not be considered indicative. “This is because such projections presuppose assumptions of the
the negotiation with creditors according to the terms of the proposal presented in the material and the financial and operational indicators disclosed could be subject to review according to the outcome of this discussion”, specifies the note.

Saraiva (SLED4), in judicial recovery, has rescheduled the extraordinary shareholders’ meeting of the company to January 31, 2023.

The Shareholders’ Meeting, previously scheduled for January 10, had been postponed by the CVM on the eve of the event, at the request of shareholder Alyssa Nunes Costa, owner of 15.03% of the company’s ON shares.

(With Estadão, Reuters and Agência Brasil)

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