Itaú Blog

Market Update: check out the highlights of the first meeting of the year

Check out the main points discussed in the fourth edition of our live, with the participation of Gina Baccelli, our chief economist, and Laura Pitta, senior economist for China and Europe at Itaú BBA

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Itaú Private Bank

• 3 minutos de leitura

Crédito: Itaú Private Bank

Last Thursday, January 19, we held our fourth "Market Update" meeting, a monthly live on global markets with Marcelo Aagesen, Head of Global Markets, and Niraj Patel, Chief Equities Strategy, both from Itaú Private Bank International.

Check out the highlights of the conversation:

China's recovery cheers markets, and global disinflation tends to continue

After 3 years adopting a severe policy to combat COVID-19, China is reintegrating to the world, and expectations in the economic area are high. With the prospect of the Chinese New Year at the end of the month, it is already possible to identify an increase in ticket sales, and other indicators, such as mobility, are no longer so distant from pre-pandemic levels, although they are still at low levels.

The return of travel in China and the data made public on Monday have increased hopes for a comeback in the second-largest economy in the world, which up until this week had been experiencing its slowest growth rates in over 50 years. The most recent information adds a positive tilt above the 4.8% prediction. China's consumption, which has not shown a transfer of income since before 2020, is the largest worry.

As for the impact of the Asian recovery on the global recovery, the outlook - although positive - is not so good. With the European and American economies slowing down, it is not expected that China will be able to contribute significantly to this recovery.

Oil

As for the projections regarding Oil, the biggest impacts could come both from the global economy and from China's recovery. However, the normalization of Chinese mobility and the global economic slowdown end up bringing balance.In a balanced market scenario, the price expectation is 80 USD on Brent (today at 87.15 USD), something very close to the current scenario.

Although stable, but still unresolved, the Russia-Ukraine conflict remains on the radar. A change in dynamics could influence the price of oil, which - at least so far - has not occurred in a significant way.

Global Scenario

World events continue to be in line with the expectations projected in the basic scenario, with the main central banks showing signs of stopping interest rate hikes. The expectation is for a much better year in terms of inflation compared to last year.

International Market

In the USA, the fixed income markets have already started to price in lower inflation and are performing well in the short term. The stock market, on the other hand, is up, but there is still speculation about how much the pace of economic recovery - and the consequent demand for oil - may impact its performance, both positively and negatively.

Watch the full video: