“Super Wednesday” with Fed, Copom and congressional elections; check out more market highlights today

The session is quite challenging for the markets. Asian stock markets closed higher, while US futures indices traded lower on Wednesday (1), ahead of the Federal Reserve’s (Fed) interest rate decision.

Most investors are expecting a 0.25 percentage point hike in interest rates from the Fed, but hope slowing inflation prompts Fed Governor Jerome Powell to signal a pause in monetary tightening in the near future.

Earnings season continues steadily, with the release of figures from Meta Platforms, which owns Facebook.

Ibovespa today: live market movement this Wednesday

In these parts the Monetary Policy Committee (Copom) decides today the future of monetary policy and it is practically unanimous in the market that the Selic remains at the current level of 13.75% per annum.

In the political field, today the new Congress takes office and the election of the presidents of the House and Senate is a highlight in Brasilia.

From a business perspective, mining company Vale (VALE3) reported 2022 iron ore production below target given licensing delays in Serra Norte and operational performance in S11D.

1. World Scholarships

WE

US index futures traded at a low on Wednesday morning, following a high the day before, boosted by lower labor costs and decelerating inflation, which was seen as a positive sign by investors as they prepare for the decision on the Fed today.

In addition to monetary policy, investors await ADP survey, with private sector job creation. Refinitiv consensus points to opening 170,000 jobs.

Also highlighted is the budget season, with the publication of the budget by Meta, owner of Facebook.

See how the futures markets performed:

• Dow Jones Futures (US), -0.40%
• S&P 500 Futures (US), -0.35%
• Nasdaq Futures (US), -0.24%

Asia

Asian markets finished higher as investors braced for US rate hikes, as well as some economic data from the region.

China’s industrial activity contracted again from previous readings in January, albeit at a slower pace, marking the sixth consecutive monthly contraction.

January’s Caixin Industry Purchasing Managers’ Index (PMI) came in at 49.2, up slightly from December’s 49.0 but still below Reuters expectations of 49.5.

Japanese manufacturing activity also recorded another contraction in January, marking the third consecutive month of contraction.

• Shanghai SE (China), +0.90%
• Nikkei (Japan), +0.07%
• Hang Seng Index (Hong Kong), +1.05%
• Kospi (South Korea), +1.02%

Europe

European markets are trading at highs in today’s session as investors reflect on economic data from the region and await the Fed’s monetary policy decision.

Inflation in the Eurozone in January reached 8.5% on an annual basis, below the Refinitiv consensus, which forecast a 9% increase on an annual basis.

The Eurozone unemployment rate came in at 6.6% in December, slightly above Refinitiv’s consensus, which forecast the unemployment rate at 6.5%.

Tomorrow there will also be a monetary policy decision in Europe. The expectation is that the European Central Bank (ECB) will raise interest rates by another 50 basis points at its meeting on Thursday (2).

• FTSE 100 (UK), +0.12%
• DAX (Germany), +0.02%
• CAC 40 (France), +0.05%
• FTSE MIB (Italy), +0.45%

Goods

Oil prices rise in today’s trading session, supported by a weaker dollar, echoing signs of decelerating inflation in the US, easing fears that the world’s largest oil consumer could face a recession due to of further increases in interest rates.

Investors will also be following today’s meeting of the Organization of the Petroleum Exporting Countries and Allies (OPEC+), where producers are expected to endorse their current production targets agreed in November.

Iron ore prices in China are low again as investors assess demand in China.

• WTI crude oil, +0.95%, to 79.62 dollars a barrel
• Brent Oil, +0.73%, to 86.08 dollars a barrel
• Iron ore traded on the Dalian Stock Exchange fell 0.69% to 867.00 yuan, or 128.60 US dollars

Bitcoin prices fell 0.59% to $22,971.00

bitcoins

• Bitcoin, -0.53% to $39,439.32 (24 hours ago)

2. Schedule

In Brazil, the Monetary Policy Committee (Copom) decides this Wednesday the future of monetary policy and it is virtually unanimous in the market that the Selic will be kept at the current level of 13.75% per annum. The cycle of increases in base rates was interrupted last September, after twelve consecutive increases.

In the United States, the Open Market Committee (FOMC) is expected to slow the pace of monetary tightening that began last year. According to CME Group’s rate monitor, 98.4% of analysts believe rates will be increased by 25 basis points, in the range of 4.50% to 4.75%.

Today there is also the ADP survey, with the creation of jobs in the private sector. Refinitiv consensus points to opening 170,000 jobs. On the same day, the JOLTS report is released, with the number of open positions in the country – the average of the market projections points to 10.2 million.

Brazil

9am: December producer price index

10 am: Fernando Haddad, Minister of Finance, participates in the opening of the Judicial Year 2023

10: January manufacturing PMI

2.30pm: Weekly FX stream

15: January trade balance; Refinitiv consensus projects a US$3 billion surplus over December

17: Haddad meets with Petrobras president, Jean Prates

18:30: Copom decision

United States of America

10:15: Private Work (ADP) in January; Refinitiv’s consensus calls for the creation of 170,000 jobs

11:45am: January manufacturing PMI

12:00: December construction expenses

12:30: Weekly oil inventories

16: Fomc, expecting to raise the rate by 25 basis points, in the range between 4.50% and 4.75%.

4:30pm: Press conference by Fed Chairman Jerome Powell

3. Economic news

Copom decides on interest rates

Amid fears of a possible US recession and uncertainties over inflation trends in Brazil, the Central Bank’s (CB) Monetary Policy Committee (Copom) will announce its interest rate decision late today.

According to the Focus bulletin, a weekly survey of market analysts, the Selic rate should remain at 13.75% per annum for the fourth consecutive time. Market analysts expect the rate to remain at this level until mid-2023.

“At the same time that most economists agree that the Selic should be kept at 13.75%, everyone is eager to understand how Copom sees the current scenario, with risks coming from the fiscal side, where it will still be needed a new fiscal anchor. revealed, and the expectation of changes in inflation targets,” comments Bradesco, in a report.

4. Political news

Elections to the Presidency of the Chamber and Senate

The current presidents of the House, Arthur Lira (PP-AL), and of the Senate, Rodrigo Pacheco (PSD-MG), come in as favorites for re-election to office in the internal elections of the National Congress, which take place this Wednesday.

The dispute in the Senate has Pacheco as the favorite, but he should have a closer dispute at the head of the Chamber against Rogério Marinho (PL-RN).

Arthur Lira (PP-AL), in turn, is a clear favorite for re-election, as he does not face competitive bids for the House.

Moraes terminates PF to listen to Valdemar Costa Neto

Supreme Federal Tribunal (STF) minister Alexandre de Moraes has ordered the Federal Police (PF) to hear the president of the Liberal Party (PL), Valdemar Costa Neto, regarding the statements he allegedly made on draft documents with a coup -like content. The time limit for questioning is a maximum of five days.

In recent statements, commenting on the draft coup seized at the residence of former Justice Minister Anderson Torres, the President of the PL stated that proposals with similar content were circulating among the interlocutors of the Bolsonaro government, and that he himself would have received documents of this type , but that would destroy them.

5. Corporate Radar

Good (VALUE3)

Vale (VALE3) produced 307.79 million tons of iron ore in 2022, 1.6 percent less than a year earlier, the mining company said in its production report on Tuesday. The volume fell short of the company’s recently revised goal for the year, of 310 million tons, amid delays in licensing at Serra Norte and operational performance in S11D, the mining giant said on Tuesday.

THERaw material sales totaled 260.66 million tonnes last year, down 3.8% from 2021, Vale said.

Petrobras (PETR3;PETR4)

Petrobras (PETR3;PETR4) has received, in cash, from Shell, the amount of BRL 347 million, referring to the company compensation supplement (earnout) for the financial year 2022, for the Atapu block. The amount already includes the pre-tax value
incidents involving Shell’s 25% stake.

The state company also received the amount of R$ 132 million, as victim-beneficiary of the multi-award-winning collaboration agreement signed between the Federal Public Prosecutor and Rogério Santos de Araújo, before the Federal Supreme Court.

The state-owned company also claims it did not have access to the term and attachments to the said agreement, which remains confidential in Federal Court.

American (AMER3)

Americanas (AMER3) informed yesterday evening that it will ask Justice to finance a minimum amount of R$ 1 billion to increase its cash flow. The dealer will attempt the operation through DIP financing (debtor in possessionin English), which can only be carried out for companies subject to judicial recovery.

The company specified that it is discussing with its main shareholders, the trio of billionaires Jorge Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles, the possibility of them subscribing up to the entire minimum amount. According to Americanas, DIP Financing aims to help the company “maintain the normal course of its business and strengthen its liquidity.”

(With Estadão, Reuters and Agência Brasil)

Related