Ibovespa Jumps as Lower Oil Prices Ease Inflation Fears

The Ibovespa rose nearly 2% to trade above 181,000 on Monday, tracking a broad global market recovery as falling oil prices eased inflation concerns. Oil prices declined after some tankers successfully crossed the Strait of Hormuz, reducing fears of a prolonged energy shortage and broader inflationary pressure. Most sectors advanced, with major banks and utilities leading gains: Itaú rose 2.3% and Axia 1.9%. Vale and Petrobras also posted gains of 1.4% and 1.3% respectively, despite softer iron ore and oil prices. Embraer gained 1.5% and Rede D’Or rose 1.7%. In other news, Brazil’s IBC-Br index, a key GDP proxy, rose 0.8% in January. However, market expectations in the Focus bulletin rose for both 2026 inflation to 4.10% from 3.91% and the Selic rate to 12.25% from 12.13%.

The Ibovespa index retreated 0.9% to close at 177,653 on Friday, capping a volatile week as intensifying geopolitical tensions in the Middle East and a strengthening US dollar outweighed the positive domestic momentum from January's services sector growth. While early trading saw gains driven by services activity expanding 0.3% beyond market expectations, the index reversed course as crude oil prices surged back toward $100 per barrel, fueling global risk aversion and prompting a flight to liquidity. Although the Ministry of Finance maintained its 2026 GDP growth projection at 2.3%, the broader market remains burdened by high container costs and the persistent threat of energy-driven inflation, forcing a cautious recalibration of asset valuations as participants await next week’s Federal Reserve and BCB policy meetings.

The Ibovespa index rose nearly 1% to above the 180,500 mark on Friday as a favorable domestic services sector report and declining future interest rates offset global macroeconomic instability stemming from the Middle East conflict. January services sector growth of 0.3% exceeded expectations and helped alleviate investor anxiety regarding a potential economic slowdown, while a downward shift across the future interest rate curve provides relief for domestic credit-sensitive equities. Although the US release of PCE inflation data confirmed price pressures remain above target, the market found support as US oil futures moderated, which helps diminish the immediate outlook for energy-driven cost push inflation in Brazil. The Ministry of Finance maintaining its 2026 GDP growth projection at 2.3% further stabilizes the outlook despite global supply chain hurdles such as rising container costs. Retail and financial sectors led the recovery.