2018.01.1409:27:00UTC+00BRAZIL: Ibovespa Closes Steady Even After Rating Downgrade By S&P

Ibovespa, the benchmark stock market index in Brazil, closed slightly lower (-0.02%) Friday at 79,349.12 points, even after S&P downgraded Brazil's credit rating from BB to BB-. The losses were limited by bets from some investors that the Brazilian Congress could pass the pension reform next month.

"There is an expectation that the government will be able to use Brazil's downgrading as an argument to pass the pension reform, so much that the market has not reacted badly," said Jos? Costa, an economist at Codepe Corretora.

Lerosa Investimentos' analysts said that the downgrading "feeds the expectation of speed and urgency to the political class for the approval of the pension reform," but it is a defeat for the government, which has tried to at least postpone the rating agency action.

Analysts also point out that a favorable external scenario, with U.S. stock markets renewing records, kept the bullish trend in the local market.

Among the shares, steel companies continued moving higher. Gerdau Metal?rgica (+2.54%) and Usiminas (+2.04%) were among the best performances, still reflecting positive recommendations and price adjustments for steel.

Also despite the downgrade of Brazil's credit rating by S&P, the locally traded U.S. dollar closed down by 0.40%, quoted at R$ 3,207 - the lowest level since October 20, 2017 when it reached R$ 3.19. The greenback was driven by the performance abroad, weakening against major currencies. In the week, the U.S. devaluation against the Brazilian real reached 0.83%.

For the next week, investors still see the Ibovespa with a bullish trend, but with less impetus.

"It should be remembered that the Ibovespa has already risen a lot at the beginning of this year and may be closer to stability," Costa noted.