Ibovespa Tumbles as Middle East Conflict Sparks Global Selloff

The Ibovespa fell nearly 4% to trade below 182,500 on Tuesday as a global selloff deepened amid escalating Middle East conflict. Rising oil prices, driven by supply fears around the Strait of Hormuz, stoked inflation worries, with risks of shallower rate cut cycle now  materializing. All sectors declined except oil-related stocks.  Major banks dragged down the index, with Itaú losing over 4% and Bradesco down about 5%. Utilities also fell, with Axia losing more than 5%. Heavyweights Ambev (-3%), WEG (-3%), and Vale (-5%) dragged further. In contrast, Petrobras rose over 1.5% on higher oil prices. On the data front, Brazil’s GDP grew 2.3% in 2025, the lowest full-year rate since 2020’s 3.3% pandemic contraction.

The Ibovespa staged a late-session recovery to close 0.3% higher at 189,307 on Monday, overcoming an early plunge driven by Middle East warfare. While joint US-Israeli strikes on Iran initially rattled global markets, the Brazilian index was bolstered by a powerful 5% surge in Petrobras as the closure of the Strait of Hormuz sent oil prices soaring. This energy-led rally was supported by Eletrobras, which gained 1.6%, and B3, up 3.5%. However, the broader market remained under pressure as the threat of energy-driven inflation fueled expectations for a more hawkish stance from the BCB. Major banks were mixed to lower, with Itaúsa falling 0.9% and Bradesco down 0.3%, while miners like Vale slipped 0.5% on global demand concerns. Despite ongoing weakness in industrial names like WEG and consumer-facing stocks like Ambev, the Ibovespa benefited from a "buy the dip" move mirroring Wall Street's recovery as traders bet on the resilience of commodity-heavy emerging markets.

The Ibovespa fell 1% toward 187,200 on Monday, mirroring global equity declines amid escalating Middle East tensions that threaten prolonged conflict. US attacked Iranian authorities over the weekend and Iran responded by striking multiple Middle Eastern states. Banks fell as the surge in energy prices from the conflict led to hawkish expectations for the BCB and lifted credit costs globally, with Itaú and Bradesco down nearly 1.5%. Utilities also declined, with Axia losing nearly 2% on higher costs of utility sourcing. Meanwhile, WEG (-1.6%), and Rede D’Or (-3%) lagged after disappointing Q4 results. Embraer lost over 2% ahead of it's reports later this week. In contrast, Petrobras surged over 3% as disruption of oil exports in the Persian Gulf triggered a surge in energy prices.