US Futures Rise, Oil Falls as Saudi Arabia Prepared to Raise Production; Brazil GDP and more market issues today

New York and European stock futures indices rise on Thursday morning (2), with investors attentive to ADP, US private sector employment, after the Federal Reserve pointed out in the Beige Book that the “tight” job market ” is its main challenge in the fight against rising prices.

The UK Stock Exchange will be closed this Thursday and Friday for the Queen’s Platinum Jubilee celebrations.

In Austria, the OPEC+ meeting will disclose at any time the decision on whether or not to increase oil production, amid the energy supply crisis that scares the world and Brazil.

Oil prices are down after the Financial Times reported that Saudi Arabia is prepared to increase oil production if Russia’s output drops significantly following European Union sanctions.

Here, the most awaited data is the Gross Domestic Product (GDP) for the first quarter of 2022, with a Refinitiv consensus pointing to a high of 1.2% compared to the fourth quarter of 2021 and an annual increase of 1.8%.

Check out more highlights:

1. World Scholarships

United States

US futures indexes operate higher on Thursday morning (2), as investors assess the economic outlook, ahead of the release of private employment data (ADP) and jobless claims.

The three main indices of Wall Street closeharam down on Wednesday. Attention to the latest economic data remains on the radar amid signs that it may not help pull the U.S. central bank out of its aggressive cycle of rising interest rates to tame inflation. much higher than desired.

The day before, the Beige Book showed that the economy in most US regions expanded at a modest or moderate pace from April to the end of May, with signs that the financial institution’s efforts to cool demand began to be felt.

JPMorgan Chase CEO Jamie Dimon warned yesterday that the US economy faces uncertainty, in part because unprecedented stimulus continues to play a role.

He said there is an “economic hurricane brewing”. For example, he said, the war in Ukraine continues to churn up commodity markets and could push oil prices above $150 a barrel. “That hurricane is right there on the road heading our way,” Dimon said. “We just don’t know if it’s a small storm or Superstorm Sandy. You have to prepare.”

See the performance of futures markets:

  • Dow Jones Futures (USA), +0.34%
  • S&P 500 Futures (US), +0.49%
  • Nasdaq Future (US), +0.63%

Asia

Asian markets ended today’s session (2) with no single direction. In mainland China, Shanghai Composite closed up 0.42% to 3,195.46, while Shenzhen Component gained 0.667% to 11,628.31.

  • Shanghai SE (China), +0.42%
  • Nikkei (Japan), -0.16%
  • Hang Seng Index (Hong Kong), -1.00%
  • Kospi (South Korea), -1.00%

Europe

European markets rose on Thursday as traders continued to assess new data on inflation and economic activity.

The UK’s FTSE 100 was closed on Thursday and Friday for the Queen’s Platinum Jubilee celebrations.

European investors are still digesting the eurozone’s inflation figures, which hit 8.1% in May, beating expectations and marking the seventh consecutive record. Investors are closely following the European Central Bank for clues on the pace and scale of interest rate hikes needed to contain consumer prices.

  • FTSE 100 (UK), closed for public holidays
  • DAX (Germany), +0.79%
  • CAC 40 (France), +0.89%
  • FTSE MIB (Italy), +0.30%

commodities

Oil prices reel after news that Saudi Arabia is prepared to increase oil production if Russia’s production drops significantly following EU sanctions.

According to a report in the Financial Times, Saudi Arabia is aware of the risks of a supply shortage and that “it is not in its interest to lose control of oil prices”.

  • WTI oil, -2.07% at $112.87 a barrel
  • Brent crude, -2.19% at $113.74 a barrel
  • Iron ore traded on the Dalian Exchange rose 3.77% to 935.50 yuan, equivalent to US$131.95

Bitcoin

  • Bitcoin, -5.29% to $29,939.76 (from 24 hours ago)

2. Schedule

This Thursday (2), the Gross Domestic Product (GDP) for the first quarter of 2022 is released. The Getúlio Vargas Foundation (FGV), in its GDP Monitor, forecasts growth of 1.5% in economic activity for the period, with the fourth quarter of 2021, driven by the services sector.

Read more: 1st quarter GDP expected to rise more than 1% driven by growth in consumption and high commodities

Bradesco forecasts a slightly higher growth of 1.7%, compared to the previous quarter. “The result should be boosted especially by the advance of household consumption in the period”, say the bank’s analysts. Itaú, in turn, is betting on a growth of 1.3% between the quarters.

The Brazilian Institute of Geography and Statistics (IBGE) also publishes its Producer Price Index (PPI).

Brazil

5am: IPC-Fipe

9am: Quarterly GDP, Refinitiv consensus points to 1.2% monthly rise and 1.8% annual rise

9am: April producer price index

11:00 am: Paulo Guedes, Minister of Economy, despatch with the Special Secretary for Foreign Trade and International Affairs, Roberto Fendt

12:00: Guedes meets with Federal Deputy, Luiz Philippe de Orleans e Bragança (PL/SP)

2 pm: Campos Neto participates in a meeting with representatives of the Zetta Association to discuss institutional matters

3:30 pm: Campos Neto participates in a meeting with Robert Citrone, CEO of Discovery Capital Management to discuss institutional matters.

4:00 pm: Bolsonaro and Guedes participate in a meeting of the Council of the Investment Partnerships Program – CPPI

USA

9:15 am: Private ADP jobs, Refinitiv consensus points to 300,000 job creation

9:30 am: Claims for weekly unemployment benefits, Refinitiv consensus points to 210,000 claims

11:00 am: Change in orders to the industry monthly

12:00: Change of weekly EIA oil inventories

3. Senate approves bill that returns overpaid amounts on the electricity bill

The Senate approved on Wednesday (1) a bill (PL) that provides for the return of surplus taxes collected by electricity distribution companies. In practice, the measure can reduce the value of the electricity bill for the consumer. Project goes to the Chamber.

According to the approved text, the National Electric Energy Agency (Aneel) will implement the allocation of credits referring to the Program for Social Integration and Formation of Public Servant Assets (PIS/Pasep) and the Contribution on the Financing of Social Security ( Cofins) that companies overcharged their users. This destination, according to the project, will take the form of tariff reduction.

Chamber approves MP that changes PIS and Cofins taxation on ethanol

The Chamber approved the provisional measure (MP) that reformulates the taxation of the Social Integration Program (PIS) and Social Security Financing Contribution (Cofins) on fuel alcohol sold by cooperatives directly to the retail sector. The text goes to the Senate for analysis.

calamity decree

Four months before the election, a wing of the Bolsonaro government defends the declaration of a state of public calamity, under the pretext of stopping the rise in fuel prices, according to Folha. The objective is to ensure the opening of extraordinary credits, which allow the use of resources outside the spending ceiling, to pay price subsidies or pay aid to truck drivers, delivery people and application drivers. The war in Ukraine and the possibility of a diesel shortage are used as justifications for the measure.

4. Covid

Last Wednesday, Brazil recorded 121 deaths and 41,755 cases of covid-19 in 24 hours, according to information from the consortium of press vehicles, at 8 pm.

The moving average of deaths from Covid in 7 days in Brazil stood at 105, a decrease of 7% compared to the level of 14 days earlier.

The moving average of new cases in seven days was 31,314, which represents an increase of 96% compared to the level of 14 days before.

The number of people fully immunized against Covid in Brazil reached 166,188,959, equivalent to 77.36% of the population.

The number of people who took at least the first dose of vaccines reached 178,509,073 people, which represents 83.09% of the population.

The booster dose was given to 92,980,330 people, or 43.28% of the population.

5. Corporate Radar

GPA (PCAR3)

GPA’s Board of Directors (PCAR3) approved the adhesion to the share buyback program of its subsidiary Éxito.

According to a statement, the decision was taken due to the high valuation of Éxito due to the suggested price of its shares, as based on the evaluation carried out by an external consultancy.

Currently, GPA holds 96.57% of Éxito’s share capital, with 91.57% held directly by GPA and the remaining 5.00% held by its subsidiary GPA2. Thus, considering that the buyback plan allows each shareholder of Éxito to sell up to 3.40% of its interest, GPA will sell 13,935,798 shares and GPA2 will sell 760,927 shares.

Considering the sale value of each share, the total gross sales value will be equivalent to approximately R$386.7 million.

Inter (BIDI11)

The Central Bank (BC) approved Inter’s corporate reorganization, approved at an extraordinary general meeting on May 12.

At the meeting, the corporate reorganization was approved with a view to migrating the shareholder base from Inter to Inter & Co, Inc., a company incorporated under the laws of the jurisdiction of Cayman, with the listing of its shares on the Nasdaq index, of the stock exchange of securities in the United States, and with trading of Level I BDR certificates, backed by Class A Shares issued by Inter&Co, on B3 (B3SA3).

However, there are still other steps to be taken, such as verification (or waiver, as the case may be) of compliance with the conditions preceding the disbursement, in favor of Inter Holding Financeira SA, of financing to be contracted by it with financial institutions, in the amount of up to R$1.150 billion, to face the redemption of HoldFin’s redeemable preferred shares corresponding to the Cash-Out Option.

MRS Logistics

The Federal Audit Court (TCU) approved the process of early renewal, for another 30 years, of the concession of the railroad operated by MRS Logística, a rail network of 1,600 km that crosses the States of Minas Gerais, Rio de Janeiro and Sao Paulo. According to the company, almost 20% of what is exported by Brazil and a third of all the cargo transported by trains in the country passes through MRS tracks.

With the renewal, the company, which has managed the concession since 1996, will operate the asset until 2056.

Petrobras (PETR3;PETR4)

Petrobras (PETR3;PETR4) signed a contract for the purchase of Edison’s interest (50%) in the company Ibiritermo, for the price of R$ 1.00, in compliance with the Energy Conversion Agreement, signed on June 21, 2002 with to Ibiritermo SA.

Additionally, at the conclusion of the transaction, Petrobras will make the payment of compensation from the share capital in the amount of R$ 2.5 million to Edison SpA, under the terms provided for in the share purchase and sale agreement, and the ECC will be terminated, with the transfer of the Ibirité Thermoelectric Power Plant (UTE Ibirité) to Petrobras, the only asset of Ibiritermo, which has been operated by Petrobras since the signing of the ECC.

Also read: Slicing up Petrobras may not be the best privatization model, says counselor

Petrobras already has a 50% interest in Ibiritermo SA and, after the transaction is concluded, the state-owned company will hold 100% of the shares of Ibiritermo SA and the exclusive property of UTE Ibirité.

(With Estadão, Reuters and Agência Brasil)

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