Brazil’s benchmark stock index Ibovespa fell 0.74 percent in the first trading session of the year, ignoring the good mood in Wall Street with domestic matters dominating investors’ minds.
Ibovespa began the day on positive ground, but ended the session in the red due to worries about the hospitalization of President Jair Bolsonaro — who was admitted to a private facility in São Paulo with an intestinal obstruction — and renewed concerns regarding the country’s fiscal balance.
Earlier today, the government’s House whip Ricardo Barros asked for increased flexibility in Brazil’s federal public spending rules, claiming that the government’s tax revenue has risen but it cannot access the funds.
Fiscal fears were among the main constraints on Brazil’s stock exchange last year, and Mr. Barros’s words reportedly sparked a similar reaction on Monday, pushing bond yields upwards and taking a toll on stocks linked to the domestic economy, such as construction firms.
Earlier today, the Central Bank Focus Survey showed that the country’s top financial institutions have reduced their economic growth forecasts once again, now expecting the Brazilian economy to grow by a mere 0.36 percent in 2022, rekindling fears of stagflation.