Dollar and Ibovespa close lower with risk aversion, rising oil and political tensions

The dollar and the Brazilian stock exchange ended Monday (14) pressured by risk aversion in the markets, on a day marked by the rise of oil, uncertainty in the domestic political scenario and geopolitical tensions. The US currency approached R$5.15, while the Ibovespa fell almost 1%.

Main numbers of the day

Cash dollar: R$5.149, increase of 0.49%;

Dollar for the year: accumulated drop of 6.19%.

Ibovespa: 185,500.88 points, down 0.91%;

Brent oil: US$105.68, up 1.02%.

Dollar reduces rise

The dollar rose more than 1% during the morning and reached a maximum of R$5.183, just before 11 am. The pressure reflected the appreciation of the US currency abroad and the search for assets considered safer in the face of the advance of oil and geopolitical tensions.

The price lost strength during the afternoon, reaching a low of R$5.1414, after statements by United States President Donald Trump about possible negotiations with Iran reduced some of the concerns about the global oil supply.

Abroad, the DXY index, which tracks the dollar against six strong currencies, advanced 0.41% at the end of the afternoon, at 99.508 points.

In Brazil, political uncertainties also influenced business, amid the release of electoral surveys. The market is also following the crisis at the Federal Supreme Court (STF) and the developments in the investigations involving Banco Master. The case related to Minister Alexandre de Moraes is scheduled to be analyzed by the STF plenary this Tuesday (15).

In the interest market, the expectation is for a reduction in the difference between Brazilian and American rates. The Federal Reserve (Fed, Central Bank of the United States) will decide on interest rates in the US on Wednesday (17), while the market projects the continuation of the Selic cutting cycle.

Stock market retreats

The Ibovespa ended the session down 0.91%, at 185,500.88 points. The index fluctuated between a minimum of 183,813.36 and a maximum of 187,320.96 points. The financial volume totaled R$24.4 billion.

The fall was mainly driven by mining shares, in an environment of decline in iron ore futures contracts traded in China. The Brazilian political scenario also contributed to instability.

Abroad, concerns about the risks related to the advancement of artificial intelligence also affected market sentiment. In New York, the S&P 500 ended the day with a drop of 0.48%.

Oil advances

Oil was one of the main factors putting pressure on the markets. Brent for November was traded at US$109.80 during the morning, an increase of close to 5%, after new attacks on energy infrastructure in Saudi Arabia and on ships in the Middle East.

The price lost strength in the afternoon with the indication of possible negotiations between the United States and Iran and news about a possible suspension of attacks on energy infrastructure between Russia and Ukraine.

Even so, the Brent barrel, a reference for international negotiations, ended the day at US$ 105.68, an increase of 1.02%. The contract accumulates gains of more than 15% in September and approximately 75% for the year.

The rise in oil prices increases concerns about inflation and could influence the monetary policy decisions of the main economies, keeping the issue at the center of markets' attention this week.

*With information from Reuters