International volatility causes crash to Brazil stocks, currency

International volatility causes crash to Brazil stocks, currency
Photo: Cristian Dina/Shutterstock

A wide range of concerns among international investors is driving stock indexes down in the U.S. — which has a knock-on effect in Brazil. Local benchmark stock index Ibovespa closed Monday down over 2.5 percent.

Fights between Republicans and Democrats over the U.S. government’s debt ceiling is the main concern, but prolonged high inflation rates in the U.S. are also raising tension — especially as oil prices continue to climb. 

Moreover, higher U.S. bond yields are expected to make tech companies’ outsized profits less attractive in the future, which, combined with accessibility issues on Facebook-owned apps, is leading to a tech selloff and affecting American indexes.

Also in the international arena, investors are closely monitoring the Evergrande crisis in China, as the company’s trading was halted amid reports there is an offer to purchase its property services unit. 

Meanwhile, the domestic scenario is doing nothing to push Brazilian stock prices up. The latest Focus Report from the Central Bank showed another increase to year-end inflation forecasts, rising from 8.45 to 8.51 percent. Pandora Papers revelations that Economy Minister Paulo Guedes and Central Bank Chairman Roberto Campos Neto own offshore accounts in tax havens was certainly not welcome news, but have not affected market behavior.