Ibovespa Drops on Inflation Surge

Brazil's Ibovespa closed flat at 188,052 on Thursday, recovering from its earlier slump to track some respite for global equities after Iran said it was considering a toll for selected tankers out of the Persian Gulf. The developments eased recent concerns that the halt of energy exports from the key region would trigger stagflationary crises across major economies. Still, Petrobras shares gained nearly 2% as benchmark crude oil prices rose to their highest in nearly 20 years for immediate deliveries. Utilities extended their positive momentum and also closed higher, with Sabesp adding nearly 1%. In turn, rate futures reflected risks for a higher benchmark rate from the central bank due to inflationary risks pressuring banks. Itau, Bradesco, and Banco do Brasil closed in the red. Markets in Brazil will be closed on Friday for the Easter holiday.

The Ibovespa lost over 1% to trade below 185,500 on Thursday as oil prices surged and global stocks fell after US President Trump shattered hopes for a quick Middle East resolution. Trump declared in a prime-time address that the US would hit Iran "extremely hard" in coming weeks, rattling markets and reigniting stagflation fears. Bond yields climbed as investors priced in a more hawkish stance from major central banks, weighing on banking stocks amid credit demand concerns. Major banks posted heavy losses, with Itaú and Bradesco each down over 2%. Utilities also declined between 2.5 and 3%, with Axia down 2.4%. Other laggards included Rede D'Or down 2.4%, WEG down 2%, and Vale down 1%, further pressured by lower iron ore prices. In contrast, Petrobras climbed nearly 3% on rising oil prices.

The Ibovespa rose 0.3% to 187,953 on Wednesday as optimism for a Middle East ceasefire fueled a global rally in risk assets. Market sentiment improved after President Donald Trump confirmed that Iran requested a ceasefire and suggested US military involvement could conclude within weeks provided the Strait of Hormuz is reopened. These developments pulled WTI crude futures down which weighed on energy heavyweights as Petrobras fell 4.4%. Lower future interest rates supported the financial sector with Banco do Brasil gaining 2.7% and Santander rising 2% while Bradesco advanced 1.6%. Meanwhile Vale edged up 0.6% and Embraer surged 4.6% to lead industrial gains. Domestically the Manufacturing PMI rose to 49.0 in March indicating the slowest contraction in nearly a year despite persistent input inflation.