2018.03.2718:32:00UTC+00BRAZIL: Ibovespa Falls With Electoral Uncertainty And U.S. Trade War

Ibovespa, the benchmark stock index in Brazil, closed down 1.50% to 83,808.05 points Wednesday, influenced by investors' uncertainty about the Brazilian electoral scenario, since Henrique Meirelles joined a profusion of center-right candidates. Abroad, the continuing tensions between the United States and China do not erase the possibility of a trade war.

"The Ibovespa started higher, in the expectation of a trade agreement between China and the United States, but soon was losing its strength. Trump said that he would set new rules with China regarding the theft of intellectual property, and this was an unbalance to the market. There is still uncertainty over a trade war," said Homebroker Modalmais' chief economist Alvaro Bandeira.

According to Rafael Passos, an analyst at Guide Investimentos, the entry of Fl?vio Rocha, chairman of the retailer Riachuelo, as a pre-candidate aligned with center-right divides the market opinion.

"The lack of definition of the candidates [to the presidency] is something that has contributed to volatility. Looking at the center, many candidates can divide votes of voters that could be aligned," he said.

In the business spectrum, the highlight was the 8.62% fall in Sabesp's shares after the S?o Paulo State Sanitation and Energy Regulatory Agency (Arsesp) proposed a 4.7744% tariff adjustment.

"The market expected an adjustment close to 7%," Passos said.

Petrobras' preferred shares and Vale's shares, which had the largest financial turnaround in the index, fell 2.63% and 2.76%, respectively. On the positive end, Via Varejo (+5.1%) and Peo de Allcar (+3.18%) rise amid rumors that Amazon could buy Via Varejo. The report led Magazine Luiza's shares to fall by 3.3%.

Meanwhile, the locally traded U.S. dollar closed at the highest level of the year, quoted at R$ 3.332, up 0.81%.

For Wednesday, the outlook is that the index will remain sour. According to Bandeira, there is still a lot of uncertainty surrounding the domestic market, especially regarding the habeas corpus trial of former President Luiz Inacio Lula da Silva in the Brazilian Supreme Court, scheduled for next week.