The financial market should open trading with a calmer atmosphere this Monday (2), after the Ibovespa registered its worst performance in eight years and the dollar hit R$6.
Not that the tension over the parallel announcement of the tax package and Income Tax (IR) exemption has gone away. The fiscal scenario is still the main concern for investors at the moment.
However, the positions of Arthur Lira (PP-AL), president of the Chamber of Deputies; and Rodrigo Pacheco (PSD-MG), from the Senate, have been contributing to calming the mood among investors, according to analysts, economists and CEO interviewed by the CNN Money.
Legislative leaders and the construction of a spending cut package that ensures debt sustainability, .
“I believe the market will open calmly, it will reduce [o estresse]just like Friday afternoon, with reduced worry, and the week will be calmer. More because of Lira and Pacheco’s stance, not because of the report”, he told CNN Money Diego Hernandez, economist at Ativo Investimentos.
The market’s strong reaction to the announcement of the package along with the income tax exemption for those earning up to R$5,000 was the trigger for the turbulence in prices last week.
They were not enough to prevent the , but the two’s speeches were well received by investors, helping to calm the stress in the market.
This calm, according to Ricardo Natali, CEO of Aira Invest, should continue at the opening of negotiations on Monday, if there is no news that dampens sentiment.
“What made the market calmer was Lira and Pacheco’s speech, saying that they are committed to the spending cut package, as well as to the part of the IR that will be negotiated without so much speed,” he stated.
Still on Friday afternoon (29), and further adjustments can be made, if necessary. The statement was made at the Brazilian Federation of Banks (Febraban) lunch, shortly after the market’s strong negative reaction to the fiscal package.
“Now, we are not going to do everything that needs to be done in a silver bullet, and it is not the grand finale of what we need to do. In three months I could be on the spreadsheet discussing the evolution of pensions, of the BPC. I may have to send laws to Congress,” said Haddad.
Scenario
Analysts’ biggest concern remains about public accounts in 2025 and 2026. While in the short term, according to them, the impacts of economic measures have already been priced in.
On Friday (29), the government published an Extemporaneous Report on expenses for the 5th two months. In the document, the economic team announced a reduction in this year’s budget blockade, .
“If we had just one effect of the report, it would be positive, because it shows that the government is trying to do what it can to meet this year’s fiscal target, which foresees a maximum deficit of R$28.8 billion”, says Alex Agostini , chief economist at Austin Rating.
“So, he has made contingencies and blocks to try to stay within this value. This was already expected. For this reason alone, the market should not react”, he concludes.
The turbulence in asset prices and the meltdown of the main stock market index last week reflected the market’s concern about controlling public debt in proportion to GDP – Gross Domestic Product, which adds up all goods and services produced.
This reaction increased fiscal fear and increased the premium required to invest in the country, since the IPCA + 2029 Treasury rates rose to 7.17% per year, as well as the 2027 Prefixed Treasury rates, with a rate of 14 .02% per year.
What increases debt, according to experts interviewed by CNNare mandatory expenses, which were targeted by the package to contain this expansion.
But what is still being discussed in the market is the measures announced by Haddad.
“Now, it’s not just about meeting the target, the main point is being able to reduce the debt/GDP ratio. And for this to happen, the primary deadlines will need to be much longer than has been done, so the government will probably have to adopt new measures next year”, reinforces Agostini.
