Dollar leads highs in October while Ibovespa drops almost 10% after Lula’s re-election
According to Money Times, the Ibovespa fell almost 10% in October and the dollar had the best performance among investments; Your Money points to CDI, Treasury Selic and Savings without losses.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM MONEY TIMES · 2 MIN
The re-election of Lula (PT) in October dispelled the expectations of part of the market and led to a price correction in practically all asset classes. According to Money Times, the Ibovespa fell almost 10% in the month, while the dollar was the best performing investment, rising 5.20% in cash and 4.65% in PTAX.
Until the first round, the scenario seemed different. According to Money Times, the result of that stage had fueled expectations of a change of government and boosted local assets. Seu Dinheiro reports that market participants were based on electoral polls and expected the opposition to win, with Flávio Bolsonaro (PL) ahead in the 1st round.
Lula's turnaround, however, caught financial agents by surprise, according to Seu Dinheiro. Money Times states that the outcome surprised part of the market and caused adjustments in both variable and fixed income. In other words, the movement was not restricted to the stock market.
In Seu Dinheiro's monthly investment ranking, the dollar occupies 1st and 2nd place. Post-fixed rates, which follow the basic interest rate, had little volatility, according to the same publication.
The reading about who emerged without losses, however, varies. Seu Dinheiro listed Tesouro Selic, CDI and Poupança among the applications without losses in October. Money Times, in its headline, only highlights the CDI in this condition.
What is at stake is how the market reprices the political scenario after a result that contradicts projections. As the participants relied on electoral research, the turnaround exposed the risk of building positions based on a single reading of the scenario.
What changes for the investor
For those who invest and operate, the month shows the contrast between two groups of assets: post-fixed ones, which follow interest rates and fluctuate little, and assets linked to the exchange rate and the stock market, which reacted strongly to the change in expectations. The practical effect is to monitor how prices begin to incorporate the new political framework, without taking this observation as a price forecast. Those who hold positions on the stock exchange or in the dollar have the chance to review their risks in light of the current scenario, and not the expectations that the election dispelled.
Automatically translated from Portuguese.
