Ibovespa Falls as Middle East Conflict Escalates

The Ibovespa fell more than 0.5% to drop below 184,500 on Thursday as the escalating conflict in the Middle East continued to threaten the outlook of global growth. Banks were under pressure as the conflict hampered global energy supply and increased the inflation outlook for the Brazilian economy, lifting domestic yields and raising credit costs for consumers that already deal with high interest rates from the central bank. Bradesco and Itau fell more than 0.5%. On top of that, the Brazilian unemployment rate remained relatively close to its record low following a seasonally common uptick in January, supporting the argument for hawks in the BCB. Meanwhile, Axia dropped 1.5% as markets booked profits from its recent rally and Petrobras added 0.5% on higher oil prices ahead of its full-year results, with markets expecting a record revenue.

The Ibovespa rose 1.2% to close at 185,366 on Wednesday, lifted by gains in major banks as inflation concerns eased with falling oil prices. Santander, Itaú and Bradesco each rose more than 1% as the surge in energy commodity prices stalled, reducing fears of inflation-driven delays to rate cuts. The utilities sector also advanced, with Axia 3.1%. Elsewhere, Rede D’Or rose 2.1%. In contrast, Petrobras pared gains from the prior session amid lower oil prices.

The Ibovespa plunged 3.3% to close at 183,104 on Tuesday as a global flight from risk intensified following the death of Iran’s Supreme Leader and strikes on Gulf energy hubs. The index dived nearly 5% intraday before paring losses after President Trump’s pledge of naval escorts for tankers in the Strait of Hormuz pulled oil prices off their daily peaks. Despite this reversal, the threat of an energy-driven inflationary shock weighed heavily on the BCB’s rate-cut outlook, hammering interest-sensitive sectors. Major banks led the rout, with Itaúsa and Bradesco dropping over 4.3%, while Vale slid 4.5% on global demand fears. The mining sector saw deeper pain as Gerdau and Bradespar fell more than 5.7%. On the data front, Brazil’s 2025 GDP grew 2.3%, the slowest since the pandemic, with a stagnant 0.1% Q4 confirming a sharp loss of momentum. While Braskem and Raízen bucked the trend with gains over 2.7%, the market remains gripped by regional chaos and high credit costs.