Ibovespa cuts gains on Wall Street after Powell’s speech to Reuters

São Paulo (Reuters) – Brazil’s main stock index fell early Monday afternoon, in line with New York stock exchanges, after Federal Reserve Chairman Jerome Powell indicated there was a chance of a sharper rate hike. However, commodity stocks ensured the index’s rise.

The official said the Federal Reserve, the US central bank, must move “quickly” to control inflation, adding that if necessary, the institution could raise interest rates by more than 0.25 percentage points to reduce price advances.

At 14:18, it rose 0.21% to 115,553.27 points after three consecutive gains. The index was about 116,000 points before the release of Powell’s statements. The financial volume of the session amounted to 14.4 billion riyals.

“If we conclude that it is appropriate to act more aggressively, raise interest rates by more than 25 basis points in a meeting or meetings, we will do so,” Powell said in remarks prepared for a conference.

The Fed began its rate hike cycle last week with a 0.25 percentage point hike.

Traders are now pricing in a 60.7% chance of a 0.5 percentage point rate hike at the Fed’s next policy meeting in May, up from 52% before Powell’s comments. More significant increases in interest rates are considered negative for stock exchanges due to the withdrawal of liquidity from the markets.

Wall Street’s major indexes, which were trading without one direction prior to the comments, fell between 0.5% and 1.1%.

However, gains from Vale (SA :), Petrobras (SA 🙂 and large retail banks supported Ibovespa. At the opposite end, B3 (SA 🙂 and WEG (SA 🙂 were negative highlights.

The external scenario was already cautious in the morning in global stock markets, amid rising prices and a lack of progress in peace talks between Ukraine and Russia.

(by Andre Romani)