Ibovespa Slips as Investors Weigh Selic Rate Forecasts

The Ibovespa fell more than 0.5% to trade below 187,500 on Friday, weighed down by losses in the energy sector amid a pullback in oil prices. Prospects for diplomatic efforts to ease tensions around the Strait of Hormuz dragged crude prices lower. Gulf foreign ministers are expected to meet their Iranian counterpart in Oman on Monday as part of efforts to secure support for a temporary arrangement to manage shipping through the strait. Petrobras lost more than 1.5%, while Prio shed over 2.5%. Broader sectors traded mostly below the flatline as the Supreme Court crisis continued to fuel political uncertainty, weighing on the country’s economic outlook. Estate financial stocks traded lower, with BB Seguridade shedding more than 2% and Caixa falling 1%. Utilities posted losses, with Axia down 0.5%. Meanwhile, annual inflation came in slightly below estimates, helping limit losses among major private-sector banks on increased expectations for another Selic cut at the next Copom meeting.

The Ibovespa rose 1.4% to close at 188,269 on Thursday, erasing earlier losses as the market priced in a higher probability of a change in power in October’s presidential election. Recent polls have shown Flávio Bolsonaro gaining ground in the presidential race, while the shift in odds on Polymarket added further momentum to the move on Thursday. Markets associate a potential Flávio Bolsonaro victory with expectations of greater fiscal austerity, while elevated domestic yields and weak business activity continue to weigh on the economic outlook. Gains were broad-based, with major banks posting sharp advances: Itaú rose 1.8%, Bradesco gained 3.9%, and Banco do Brasil added 2.8%. Utilities also closed higher, with Sabesp up 2.2%. Rede D’Or (+3.1%) also outperformed. Petrobras rose 1.4% on higher oil prices, while Vale shed 1.1% as iron ore prices fell.

The Ibovespa edged lower to trade below 186,000 on Thursday as persistent political uncertainty weighed on the country's economic outlook. A dispute between Supreme Court justices Alexandre de Moraes and André Mendonça has escalated into an institutional crisis. The dispute centers on failed lender Banco Master, which is under investigation in a bank fraud case, and Mendonça’s disclosure of private messages allegedly sent to Moraes. The public clash raised concerns over the court’s credibility, adding to political uncertainty ahead of October’s presidential election. Meanwhile, oil extended its rally following the biggest wave of attacks on shipping in the Strait of Hormuz by Washington and Tehran on Wednesday, global yields rose on fears of prolonged inflation. Financials posted losses, with Itaú down 0.5% and BB Seguridade losing nearly 2%. Vale shed 2%, while CSN Mineração fell more than 3.5% on lower iron ore prices. Petrobras gained 1.5% on the oil rally.