The Brazilian stock market struggled on Thursday, November 7, 2024, as fiscal uncertainties continued to dampen investor sentiment.Meanwhile, Wall Street extended its rally for the second consecutive day, buoyed by Donald Trumps re-election and the Federal Reserves latest interest rate decision.The Ibovespa, Brazils main stock index, closed down 0.51% at 129,681.70 points.
Investors remained cautious due to reports of a modest government spending cut package.CNN Brasil reported that the proposed cuts could range from R$10 billion to R$15 billion ($1.75 billion to $2.63 billion), falling short of market expectations.Market analysts had anticipated cuts of at least R$30 billion ($5.26 billion) to maintain Brazils fiscal framework.
The smaller-than-expected cuts raised concerns about the governments commitment to fiscal responsibility.Ibovespa Faces Decline Amid Mixed Global Signals.
(Photo Internet reproduction)This news overshadowed positive developments in the global markets.
In contrast, Wall Street celebrated Trumps victory and the Feds decision to cut interest rates.The S-P 500 rose 0.74% to 5,973.10 points, while the Nasdaq advanced 1.51% to 19,269.45 points.
The Dow Jones remained flat at 43,729.34 points, with all three indices reaching record highs during the session.Federal Reserve Cuts Interest RatesThe Federal Reserve cut interest rates by 0.25 percentage points, bringing the target range to 4.50%-4.75%.
However, Fed Chair Jerome Powells comments cast doubt on future rate cuts.This uncertainty did little to dampen Wall Streets enthusiasm for Trumps pro-business agenda.
Investors expect Trumps second term to benefit risky assets like stocks, partly due to planned tax cuts.However, concerns linger about potential inflation acceleration and higher interest rates due to large federal deficits and increased tariffs.In the currency market, the United States dollar remained stable against the Brazilian real.
After reaching a daily high of R$5.7237, the dollar closed virtually unchanged at R$5.6753.The currencys fluctuations reflected both domestic fiscal concerns and the Feds monetary policy decision.
Rogrio Ceron, Brazils National Treasury Secretary, acknowledged market anxiety regarding the spending cut announcement.He stated that the government understands these concerns but refrained from commenting on specific initiatives until they became public.
As global markets react to political and economic developments, Brazil faces a challenge.The country must balance fiscal responsibility with economic growth.
The coming days may prove crucial as investors await further details on the governments fiscal plans and their potential impact on the countrys economic outlook.