Brazilian stocks have little chance of rising without falling interest rates

For analysts, disclosure of the fiscal package and signs of a drop in interest rates are the pending items to make the stock market turn to an upward trend


JPMorgan strategists see little possibility of the Brazilian stock market engaging in an uptrend without lower interest rates, or at least the expectation that there is a way to do so, according to today’s report to clients (27).


Emy Shayo and team claim to have considered for some time that the probable scenario was that the stock market was experiencing the peak of pessimism, but that prices showed that it could always get worse.


Brazilian stocks


Last week, the Ibovespa closed below 100,000 points for the first time since July 2022, while the EWZ – the global reference index for Brazilian shares – touched lows since the first months of 2020, at the height of the Covid pandemic in Brazil .


The JPMorgan team maintained the “overweight” recommendation for equities in Brazil, adding that it tends to see “the glass is half full”, but acknowledged that it has been “very painful”. “Structurally speaking, there are several elements that do not necessarily support an optimistic stance on Brazil.”