Ibovespa futures were in the red in the initial trades of Tuesday morning, amid heightened caution from local investors after fresh waves of geopolitical and trade-related risks materialised around the globe.
The February Ibovespa futures contract on the Brasilia stock exchange fell 0.49% to 165,665 points at 9:08 a.m.
The drop coincides with fresh tariff threats from the United States linked to US President Donald Trump’s bid for global domination in Greenland.
Trump has threatened to impose trade sanctions on eight European nations starting February 1 if Greenland is not allowed to be purchased by the US.
The announcement sparked fears of a new trade war, particularly between the US and Europe.
Fears of a trade war reemerge as investors remain watchful
Although some market participants are doubtful about how far Trump will go to enforce the proposed tariffs, investors are on high alert.
Trump has shown few signs of calming his rhetoric, which has increased concern in financial markets.
In the United States, attention is centred on the Supreme Court, which is anticipated to issue new opinions later on Tuesday.
Several key lawsuits remain pending, including one concerning the validity of Trump’s trade tariffs. The verdict might impact global trade flows and investor confidence.
The Brazilian political agenda remains in focus
On the internal level, Brazil’s political agenda is also receiving attention.
President Luiz Inácio Lula da Silva is coming to the southern state of Rio Grande do Sul to participate in the handover of housing units under the Minha Casa, Minha Vida initiative in Rio Grande.
Later in the day, Lula is expected to attend a contract signing ceremony for the construction of gas tankers, pushboats, and barges.
These events are part of a larger national agenda and are being watched by investors for potential economic and sectoral consequences.
Wall Street futures deepen losses
Global risk aversion was also reflected in US equities futures. On Wall Street, Dow Jones Futures declined 1.31%, while Nasdaq Futures fell 1.94%. S&P 500 futures fell 1.56%.
The broad-based declines highlighted the impact of rising trade tensions and geopolitical uncertainties on investor confidence.
In currency markets, the Brazilian real fell marginally versus the US dollar. The spot dollar was up 0.21% on the sell side, selling at R$ 5.376. Dollar futures were slightly higher, up 0.01% to R$5.389.
Asia-Pacific and Europe continue their falls
Markets in the Asia-Pacific closed mainly down, as investors processed the latest US tariff threats related to Greenland. The threat of rising trade conflicts with Europe dampened the mood across the region.
Japanese markets were also in focus after Prime Minister Sanae Takaichi revealed on Monday her plan to dissolve parliament and hold early elections on February 8.
Investors are keeping a tight eye on developments in Japan, as political instability adds another layer of risk.
European markets extended their losses from the previous session, with fears of fresh US trade penalties weighing on shares and dampening market confidence.
Davos, commodities, and global outlook
The World Economic Forum in Davos, Switzerland, is also receiving a lot of attention.
European Commission President Ursula von der Leyen, Chinese Vice Premier He Lifeng, and French President Emmanuel Macron are all set to deliver speeches.
Trump is set to appear at the forum on Wednesday, adding to the possibility of market-moving headlines.
In commodities, oil prices were falling as investors assessed the fallout from the United States’ move to gain control of Greenland, as well as concerns about a worldwide supply surplus.
Iron ore prices in China fell for the fourth straight session after an accident at a Chinese steel mill sparked concerns about commodity demand, impacting resource-linked assets.
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