Brazil stock market optimism tempered as fears grow over October vote

Gabriel Burin and Noe Torres
·2 min read
Brazil's B3 Stock Exchange in Sao Paulo

By Gabriel Burin and Noe Torres

BUENOS AIRES/MEXICO CITY (Reuters) - Brazilian stocks will rise less than previously expected this year as fears over October's presidential vote tarnish the outlook for the second half and double-digit interest rates prompt a switch to deposit accounts, a Reuters poll showed.

In recent weeks, Brazil's benchmark Bovespa stock index has pared the bulk of its first-quarter gains, pressured by intensifying election rhetoric and the impact of the central bank's ultra-hawkish push to fight inflation. It is now up 5.2% from end 2021 levels.

It is expected to rise a further 6.0% to 117,000 points by the close of 2022 from 110,345 points on Monday, according to the median forecast of 15 strategists polled May 12-24. That estimate was below the end-2022 view of 125,000 points returned by the last survey in February.

"We will face brutal election times, high interest rates are with us for the foreseeable future, and we have sticky inflation around the globe," said Andre Leite, partner and senior portfolio manager at Kairos Capital.

Warnings that Brazil could face similar unrest to the 2021 U.S. Capitol riot and political instability driven by concerns over the election's transparency have soured the atmosphere five months before the presidential vote.

A group of lawyers and legal experts said last week that Brazil's democracy and the independence of its judiciary are under threat from the government of president Jair Bolsonaro, who claims the voting system is liable to fraud.

His attacks on the judiciary and Brazil's electronic voting system have raised concerns he may not accept defeat in October in a race in which he is trailing his leftist rival, former President Luiz Inacio Lula da Silva.

Brazilian stocks outperformed U.S. equities in the first quarter as commodity exports from Latin America's biggest economy were considered indirect beneficiaries of disruptions to global trade caused by Russia's invasion of Ukraine.

But now more investors are pulling out of the volatile Bovespa stock index and parking their money in safer bank accounts to profit from Brazil's lofty rates which, currently at 12.75%, are among the highest in the world.

In Mexico, the S&P/BMV IPC index is forecast to gain 11.7% to 57,400 points by year-end, from 51,376 on Monday. The estimate was above the last survey's call of 57,050 points at the close of 2022.

"We stay optimistic, local company earnings continue to recover from the impact of the coronavirus pandemic and Mexico's currency stability continues to favor foreign investors," Gerardo Copca, director at MetAnalisis, said.

Mexican stocks are virtually flat so far in 2022.

(Other stories from the Reuters global stock markets poll package:)

(Additional polling and reporting by Noe Torres in Mexico City; Editing by Jan Harvey)

  • Up next
  • Up next
  • Up next
  • Up next

Latest Stories

  • Stock market today: Gold and oil spike and US futures drop after Iran comes under fire

    Gold and oil prices jumped following Israel's apparent retaliation against Iran before paring gains, while stock markets look set to open lower.

  • Receiver Eugene Lewis optimistic about Edmonton Elks' 2024 fortunes

    Receiver Eugene Lewis can't wait to start earning quarterback McLeod Bethel-Thompson's trust. The signing of Bethel-Thompson, a two-time Grey Cup champion, was Edmonton's biggest off-season move. The Elks have finished last in the West Division three consecutive years. CFL training camps open next month. "I know what a great quarterback can do," Lewis said. "Somebody with experience, somebody who's been through it and won championships and MBT has done that. "To have another guy like that, anoth

  • The Latest | Full jury of 12 people and 6 alternates seated in Trump's hush money trial in New York

    NEW YORK (AP) — A jury of 12 people and six alternates was seated on Friday in former President Donald Trump’s hush money criminal trial. The completion of the jury selection process tees up the first-ever criminal trial of a former U.S. president for opening statements and weeks of testimony in a case charging Trump with falsifying business records to suppress stories about his sex life emerging in the final days of the 2016 election. The jury includes a sales professional, a software engineer,

  • EastEnders' Balvinder Sopal thanks colleagues after mum's death

    EastEnders star Balvinder Sopal has thanked colleagues for their support in the days following the death of her mother, Nirmal.

  • Europe discards Arsenal and Liverpool shift focus to EPL title race

    LONDON (AP) — What will it take to win the English Premier League with six games remaining? That's easy — perfection. Manchester City, Arsenal and Liverpool — all eliminated from their European competitions this week — are locked in a tight battle for the title. Defending champion City leads both rivals by two points but with Pep Guardiola's team playing an FA Cup semifinal against Chelsea on Saturday, Arsenal and Liverpool can gain ground. “If you want to be champion in the Premier League, you

  • Israel’s strike has exposed Iran’s fatal weakness

    Israel’s presumed counterstrike against Iran has proved Joe Biden and David Cameron wrong in their insistence that Israel should just “take the win”. Instead, it fought back – and yesterday Iran was trying to pretend that nothing had happened.

  • Next UN climate talks are critical to plot aid for poorer nations, says incoming president

    WASHINGTON (AP) — The man who will run United Nations climate talks this November views the negotiations as a key link in international efforts to curb global warming. The conference in Baku, Azerbaijan, must build on last year's successful agreement to transition away from fossil fuels, said Mukhtar Babayev, Azerbaijan's environment minister who will serve as conference president of the talks known as COP29 this fall. And this fall's meeting must help pave the way for countries to come together

  • Police reviewing allegations against suspended Tory MP accused of pay-off to ‘bad people’

    Officers consider letter calling on them to investigate

  • Sunak accused of making mental illness ‘another front in the culture wars’

    Charities say high rates of people signed off work are caused by crumbling public services after years of underinvestment

  • Police 'reviewing letter' about Tory MP Mark Menzies after alleged misuse of funds

    Lancashire Police says it is in the ‘process of reviewing available information in more detail’

  • TREASURIES-Yields slip as investors move toward safe haven assets

    Easing concerns over a broad Middle East conflict will likely continue to pressure Treasuries, which have sold off for much of the week on worries that persistent inflation will prevent the Federal Reserve from cutting interest rates this year. A number of Fed officials have said this week that they do not feel urgency to cut rates given the strength of the U.S. economy and labor market. Minneapolis Fed President Neel Kashkari told Fox News Channel late Thursday that he also wants to be "patient," with the first rate cut "potentially" not appropriate until next year.

  • ‘Get off my mom’: Stabbing suspect killed in house fire after standoff with Sacramento deputies

    A child was screaming at the suspect to leave his mother alone after a stabbing, Sacramento deputies said.

  • Penguins GM Dubas joins Canada's front office for world hockey championship

    CALGARY — Pittsburgh Penguins general manager and president of hockey operations Kyle Dubas has been named to Canada's front office team for the upcoming world hockey championship. Hockey Canada announced Friday that Dubas will make his international debut as an associate general manager on GM Rick Nash's staff. Dubas, from Sault Ste. Marie, Ont., recently completed his first season leading Pittsburgh's front office. The Penguins made a late playoff push but ended the season three points behind

  • Travellers ‘sleeping on floor and missing medication’ amid Dubai airport chaos

    One man said he witnessed a bottle being thrown and staff raising their voices.

  • Full jury of 12 people and 6 alternates is seated in Trump's hush money trial in New York

    NEW YORK (AP) — A full jury of 12 people and six alternates was seated on Friday in Donald Trump’s hush money case, drawing the first criminal trial of a former U.S. president a step closer to opening statements. Lawyers spent days quizzing dozens of New Yorkers to choose the panel that has vowed to put their personal views aside and impartially judge whether the presumptive Republican presidential nominee is guilty or not. The jury includes a sales professional, a software engineer, an English

  • Super Micro Computer stock sinks, bitcoin trades higher ahead of halving: Yahoo Finance

    Shares of Super Micro Computer (SMCI) are plunging after the server company announced its third quarter earnings date, but didn’t pre-announce its results. It has investors concerned the quarterly update may not be as bullish as they had hoped. Bitcoin (BTC-USD) is rising ahead of its much-anticipated halving, which is expected to happen this weekend. Other trending tickers on Yahoo Finance include Netflix (NFLX), Nvidia (NVDA), and American Express (AXP). Top guests today include: 3:05 p.m. ET - Alex Morris, F/m Investments President and Chief Investment Officer 3:15 p.m. ET - Stacy Rasgon, Bernstein Managing Director and Senior Analyst 4:05 p.m. ET - Karen Karniol-Tambour, Bridgewater Associates Co-Chief Investment Officer 4:20 p.m. ET - Brian Gardner, Stifel Chief Washington Policy Strategist

  • Bank of Korea chief watching Middle East tensions for FX, growth outlook reviews

    South Korea's central bank chief on Friday said odds for any further policy action to stabilize the slumping Korean won now depend on how events in the Middle East unfold as the bank is ready to take steps to stabilize forex markets if needed. In an interview with Reuters, Bank of Korea Governor Rhee Chang-yong said tensions in the Middle East appeared to plateau after Iran downplayed Israel's retaliatory drone strikes against it but geopolitical uncertainty still poses risks for the dollar-won market, as well as the country's inflation.

  • Coroner's inquest to probe death of B.C. man shot dozens of times by police in 2018

    KAMLOOPS, B.C. — The British Columbia Coroners Service says it will hold an inquest into the death of a man who died in a hail of police gunfire after starting a shootout with RCMP officers in Kamloops. The service says the inquest will begin on May 6 at the Kamloops law courts to determine the facts related to the death of 35-year-old Eugene Marcano, who was shot and killed by Mounties on Sept. 14, 2018. A report from B.C.'s Independent Investigations Office in 2019 says Marcano initiated a sho

  • Apple pulls WhatsApp and Threads from App Store on Beijing's orders

    HONG KONG (AP) — Apple said it had removed Meta’s WhatsApp messaging app and its Threads social media app from the App Store in China to comply with orders from Chinese authorities. The apps were removed from the store on Friday after Chinese officials cited unspecified national security concerns. Their removal comes amid elevated tensions between the U.S. and China over trade, technology and national security. The U.S. has threatened to ban TikTok over national security concerns. But while TikT

  • Google staff ordered to leave politics at home after anti-Israel protests

    Google’s chief executive has told staff to leave their politics at home in a rebuke to employees who have campaigned against its work with the Israeli government.