Stocks retreat under pressure from high interest rates and political crisis in the UK; today’s market highlights

Most Asian markets closed lower, the same direction of operation of US index futures and European stocks this Friday (21), with the political crisis in the UK continuing after the resignation of Prime Minister Liz Truss and bets of a more aggressive global monetary tightening due to high inflation.

Meanwhile, European Union leaders are still debating how to deal with the bloc’s energy crisis as they meet in Brussels after Germany gave the green light to discussions on a price cap.

On the eve, the treasuries yields for ten years the US soared 11.2 basis points, to 4.241%, which helped to bring down the stock market.

The earnings season in the US continues with the release of Verizon’s results before the markets open.

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In Brazil, in addition to the political scenario, which has moved the market in recent sessions, today is the day for options to expire on the B3, which tends to increase the volume of shares traded on the Brazilian stock exchange. On the electoral news, without Lula in the presidential debate on SBT, there will be a Jair Bolsonaro sabbath.

On the corporate side, the cash and carry company Assaí (ASAI3) recorded a 47% drop in profit in the third quarter of 2022, reaching R$ 281 million. Despite the fall, the profit came above the average forecast of analysts consulted by Refinitiv, of R$ 246 million.

1. World Scholarships

United States

US futures indexes operate lower this Friday (21) and are heading for a third consecutive decline, with increased bets on higher interest rates in the world’s largest economy.

Federal Reserve officials showed no signs of backing down from their aggressive rhetoric, with Philadelphia Fed Chairman Patrick Harker saying yesterday that the central bank is not finished raising its short-term rate target amid very low levels. highs of inflation.

See the performance of futures markets:

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  • Dow Jones Future (USA), -0.44%
  • S&P 500 Futures (US), -0.63%
  • Nasdaq Future (USA), -0.98%

Asia

Asian markets mostly closed lower, with the exception of China’s Shanghai, as investors weighed in on inflation data from several economies.

Meanwhile, the yen closed at 150.20 to the dollar after hitting a new 32-year low of 150.29 during trading. The Japanese currency is down nearly 1% this week and is on track for its tenth consecutive weekly loss.

Fresh threats of intervention by Japan’s policymakers have kept investors on high alert, although there has been no news of new equities since the Ministry of Finance’s selling dollars and buying yen last month.

Japan’s consumer inflation index accelerated to a new eight-year high of 3.0% in September, which is likely to test the Bank of Japan’s resolve to keep interest rates ultra-low.

  • Shanghai SE (China), +0.13%
  • Nikkei (Japan), -0.43%
  • Hang Seng Index (Hong Kong), -0.42%
  • Kospi (South Korea), -0.22%

Europe

European markets operate lower in today’s session. Investors continue to resonate with the announcement on the eve of British Prime Minister Liz Truss’s resignation after just six weeks in office.

Truss was overthrown by an economic program that shook markets and destroyed the country’s reputation for financial stability.

The Conservative Party, which holds a large majority in parliament and does not need to call a national election for another two years, will now elect a new leader by October 28.

Britain’s retail sales figures were lower than expected, down 1.4% in September, according to the Office for National Statistics. The number is 1.3% below pre-Covid levels in February 2020.

  • FTSE 100 (UK), -0.74%
  • DAX (Germany), -1.59%
  • CAC 40 (France), -1.74%
  • FTSE MIB (Italy), -1.67%

commodities

Oil prices operate lower, with market agents weighing concerns about high inflation with optimism that China will increase its energy demand.

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Ore prices, on the other hand, are up slightly with Beijing considering reducing the quarantine period for visitors from ten to seven days.

China has adopted strict Covid-19 restrictions this year, which has weighed heavily on business and economic activity, reducing demand for fuel and ore.

  • WTI crude, -1.29% at $83.42 a barrel
  • Brent crude, -1.10% at $91.36 a barrel
  • Iron ore traded on the Dalian Exchange rose 0.07% to 676.50 yuan, equivalent to US$93.36

Bitcoin

  • Bitcoin, -0.53% to $18,960.27 (from 24 hours ago)

2. Schedule

The week ends with few relevant data, especially the release of consumer confidence in the Euro Zone in October, with a forecast of minus 30 points, compared to minus 28.8 points in September.

Brazil

1pm: Expiration of stock options

USA

3pm: Baker Hughes rig count

euro zone

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11am: Consumer confidence

3. Economic news

Economy denies plan to change rules of minimum wage and pensions readjustments

The Ministry of Economy informed that there is no plan to change the rules of the annual readjustments of the minimum wage and of pensions for inflation (INPC).

Minister Paulo Guedes says that the minimum wage and pensions will be corrected, at least, by the inflation index, and may even have a correction above this percentage.

“The information that the ministry intends to adopt a measure that could cause damage to the most fragile layer of the population is fallacious”, says a note.

TCU opinion suggests immediate suspension of the Auxílio Brasil consignment

An opinion from the technical area of ​​the Federal Audit Court (TCU) suggests the immediate suspension of the Auxílio Brasil payroll loan, according to a report in the newspaper Valor.

The document has already been dispatched to the office of the minister-rapporteur on the case, Aroldo Cedraz. The expectation in the Court is that there will be a decision against the consigned loan even today (21).

4. Political news

TSE rejects right of reply against Bolsonaro

The Superior Electoral Court (TSE) yesterday rejected requests for the right of reply and determine the withdrawal of posts on social networks. The decisions involve the campaigns of presidential candidates Jair Bolsonaro (PL) and Luis Inácio Lula da Silva (PT).

During the plenary session, the plenary unanimously denied two requests for the right of reply filed by the Brasil da Esperança Coalition, which supports the candidate Lula, against the For the Good of Brazil coalition, formed to support Bolsonaro.

Lula’s campaign questioned advertisements at election time that associated the candidate with “the high rates of illiteracy and poverty in the Northeast region”.

TSE expands its own powers to remove “fake news”

The TSE passed a resolution that, in practice, extends the powers of the court itself to remove fake news from the networks.

According to the decision, content with false or decontextualized information can be removed within two hours (or up to one hour, on election day), without the need for legal proceedings. To act, the court will no longer need to be provoked by interested parties, as is currently the case.

The resolution also determines that the court may take down channels that replicate “fake news” repeatedly. The measure also vetoes paid electoral advertising on the internet 48 hours before the vote and 24 hours after the election.

Covid

Brazil yesterday recorded 66 deaths from covid-19 in the last 24 hours, totaling 687,544 since the beginning of the pandemic.

With this, the moving average of deaths in the last 7 days is 61. Compared to the average of 14 days ago, the variation was -44%, indicating a downward trend for the seventh day in a row.

In total, the country recorded 5,096 new diagnoses of Covid-19 in 24 hours, completing 34,818,774 known cases since the beginning of the pandemic.

Assaí (ASAI3) recorded net income of R$ 281 million in the third quarter of 2022 (3Q22), 47% lower than that reported in the same stage of 2021, the cash and carry company said.

Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) totaled R$1.011 billion in 3Q22, a 20.6% increase over 3Q21.

GPA (PCAR3) recorded a 9.5% growth in total sales in continuing operations in the third quarter of 2022 (3Q22), reaching R$11.5 billion. Same-store sales rose 13.3% in the period.

Gross revenue from sales in the continued perimeter excluding service stations totaled R$4.3 billion in 3Q22, a 14.2% growth in total sales and 6.6% same-store sales versus the same period in 2021.

(With Estadão, Reuters and Agência Brasil)

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