Stocks retreat amid protests in China; Lula in Brasilia to negotiate PEC and more market issues today

World markets dawn in the negative field this Monday (28), with investors following the unrest in China, as protests against the Covid Zero policy and lockdowns erupted over the weekend.

Over the weekend, several protesters voiced their frustrations with restrictions imposed by Beijing and called for President Xi Jinping’s resignation. Local governments tightened Covid controls as cases rose, although earlier this month Chinese officials adjusted some policies that suggested the country was on track to reopen. Nearly three years of restrictions drag the second-largest economy down. Youth unemployment is approaching 20%.

Among commodities, oil prices operate close to new 2022 lows, as concerns about demand over the world’s second-largest oil consumer weighed on prices.

In Brazil, president-elect Lula landed in Brasília last night to take over the negotiations for the Transition PEC. He must meet with Arthur Lira, Rodrigo Pacheco and party leaders.

In terms of indicators, the Central Bank will release this Monday (28) the monthly default rate and credit stocks.

1. World Scholarships

United States

U.S. future indices operate low this Monday morning (28), as investors assess the impacts of the Chinese population’s demonstrations against the continuation of the tough Covid restrictions in the country.

On the economic front, traders will be on the lookout for a series of publications that will provide further information on the state of the US economy. PCE data are expected on Thursday, payroll on Friday, and on Wednesday JOLTs, the Beige Book and Fed Chairman Jerome Powell’s speech.

See how the futures markets performed:

  • Dow Jones Futures (US), -0.33%
  • S&P 500 Futures (US), -0.53%
  • Nasdaq Futures (US), -0.65%

Asia

Asian markets closed the first trading session this week in the red amid protests in China caused by the ongoing Covid Zero policy.

Thousands of people took to the streets in China to protest the restrictions imposed by Beijing. Many of the protesters called for President Xi Jinping’s resignation.

Criticisms with this tone are uncommon in the second largest economy in the world, where any manifestation against the government and the supreme leader can result in harsh reprisals.

On the exchange rate, the offshore yuan has weakened sharply against the dollar after finishing last week at around 7.20 to the dollar.

  • Shanghai SE (China), -0.75%
  • Nikkei (Japan), -0.42%
  • Hang Seng Index (Hong Kong), -1.57%
  • Kospi (South Korea), -1.21%

Europe

European markets operate in low this Monday (28), while protests against Covid in China continue. The demonstrations came as infections surged, leading to more local Covid restrictions, while a change in Chinese government policy earlier this month raised hopes for a gradual easing.

  • FTSE 100 (UK), -0.60%
  • DAX (Germany), -0.23%
  • CAC 40 (France), -0.35%
  • FTSE MIB (Italy), -0.80%

Commodities

Oil prices retreated earlier this week, with protests against strict restrictions to Covid-19 in China fueling concerns about demand for the commodity.

China, the world’s biggest oil importer, has maintained its Covid Zero policy even as much of the world has lifted most restrictions.

Contrary to what is observed in oil prices, iron ore on the Dalian stock exchange operates at an increase and is heading for the third consecutive increase.

  • WTI Crude Oil, -2.79%, at $74.15 a barrel
  • Brent crude, -2.82%, at $81.23 a barrel
  • Iron ore traded on the Dalian exchange rose 2.37% to 755.50 yuan, equivalent to US$105.07

Bitcoin

  • Bitcoin, -1.98% to $16,223.16 (24 hours ago)

2. Schedule

The highlight of the week’s agenda is the disclosure of the Brazilian Gross Domestic Product (GDP) for the third quarter of this year, on Thursday (1). Itaú projects growth of 0.5% compared to the second quarter and 3.6% on an annual basis.

On Friday (2), the industrial activity indicator for the month of October is released and Itaú forecasts an increase of 0.5% in relation to September – in the annual comparison, it projects growth of 2%.

The week will also be marked by employment data. The General Register of Employed and Unemployed People (Caged) is expected for Thursday and the Continuous PNAD for Wednesday (30).

Read too:

Brazilian GDP in the 3rd quarter, payroll in the US and Jerome Powell’s speech: what to expect in the week

Abroad, the highlight of the indicators agenda is Friday (2) when the payroll, compiled from official data on the US job market, will be released. The Refinitv consensus points to the creation of 200,000 jobs in November, a slowdown compared to October.

Brazil

8:25 am: Focus Bulletin

9:30 am: Default rate

9:30 am: Total credit stocks

10 am: Roberto Campos Neto, BC president, has a meeting with representatives of Fitch and the National Treasury Secretariat (closed to the press)

USA

12:30 pm: Dallas Fed Industrial Activity Index

Japan

8:30 pm: Unemployment rate

8:50 pm: Retail sales

3. Economic news

Transition PEC ‘is not a spending spree’, says Budget rapporteur

The general rapporteur for the 2023 Budget, senator Marcelo Castro (MDB-PI), once again refuted the criticism of the Transition PEC, of ​​which he is one of the articulators. The proposal foresees to exceptionalize the resources of the new Bolsa Família from the ceiling and open a space of R$ 105 billion in the Budget for health, education and public investment.

“(The PEC) is not a blank check, it is not a spending spree. These are actions without which the country does not work”, said the parliamentarian.

Castro again said that the consensus of the PEC should occur by Tuesday (29) and acknowledged that the presence of president-elect Luiz Inácio Lula da Silva (PT) in Brasília this week will help in the negotiations

Union emerges victorious in judgment at the STF and avoids a hole estimated at R$ 472 billion

The Union won the Federal Supreme Court (STF) judgment that could have the most impact on federal coffers next year. The virtual plenary session of the STF concluded this Saturday morning that the PIS and Cofins laws can, indeed, limit the events that generate credits, avoiding a drastic reduction in the collection of taxes that could lead to an estimated loss by the government of R$ 472 .7 billion.

4. Political news

Fiscal responsibility and social advances are not incompatible, says Alckmin

The elected vice president, Geraldo Alckmin, repeated this Saturday, 26, that the new government is committed to public accounts. “You can be sure that this adjustment and this efficiency will occur”, he said, in participation in an event organized by the group of entrepreneurs Esfera Brasil. “The fiscal adjustment will be carried out permanently,” he guaranteed.

Alckmin promised that the government of president-elect Luiz Inácio Lula da Silva (PT) will not spend more than it collects and emphasized that it will be necessary to cut expenses.

The vice-president-elect, however, stated that the adjustment will not be applied to retirees and pensioners. “To govern is to choose. There are many ways to adjust, which is necessary for Brazil to grow. But doing it with a social eye. Believe me, there will be an adjustment, and it won’t be in a week. It will be four years of adjustment, because you can improve the efficiency of public spending every day, ”he said.

covid

Brazil recorded this Sunday (27) 15 deaths from covid-19 in the last 24 hours, totaling 689,560 since the beginning of the pandemic.

With that, the moving average of deaths in the last 7 days is 80. Compared to the average of 14 days ago, the variation was +84%.

In total, the country registered 5,667 new diagnoses of Covid-19 in 24 hours, completing 35,212,035 known cases since the beginning of the pandemic.

Petrobras (PETR3;PETR4) clarified on Sunday night, in a statement to the market, that the payment of extraordinary dividends is provided for in the Shareholder Remuneration Policy, approved by the board of directors in 2019 and improved in 2020 and 2021. company is a response to recent news published in the media about the payment of dividends.

Petrobras also assured that “it does not contract debt to pay dividends” and that “its debt is on a downward trajectory”, with a reduction of US$ 5.3 billion compared to the third quarter of 2021.

PetroRecôncavo (RECV3)

The Board of Directors of PetroRecôncavo (RECV3) approved the distribution of interest on equity referring to
to the 2022 fiscal year, in the gross amount of R$180 million, corresponding to R$0.614971 per common share.

Shareholders registered in the company’s records on December 1, 2022 will be entitled to receive interest on equity, and the shares will be traded “ex-interest” from December 2, 2022.

Payment will be made to shareholders by December 13, 2022.

Gerdau informed that, this Friday (25th), its subsidiary Gerdau Next and Fundo NW Capital, as investors, signed binding instruments with Newave Energia for the subscription of equity interest in Newave’s share capital by Gerdau Next and by NW Capital, in the proportions of 33.33% and 66.67%, respectively; and long-term energy acquisition, by the company and its subsidiaries, of 30% of the energy generated by power generation projects held directly or indirectly by Newave and its subsidiaries, on a self-production basis.

(With Estadão, Reuters and Agência Brasil)

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