Brazilian Stocks Up on Rate Cut Hopes

The Ibovespa gained nearly 1% to trade above 181,000 on Tuesday as the central bank began its Selic rate meeting, with markets pricing a 0.25 to 0.50 percentage point cut, potentially marking the start of a rate reduction cycle. Bond yields edged lower and major banks traded higher. Meanwhile, Petrobras rose over 1.5% as oil prices climbed following fresh Iranian attacks on the UAE, reigniting supply fears amid Strait of Hormuz disruptions. Likewisem Vale advanced 1% on higher iron ore prices, driven by rising Chinese demand for construction steel. Elsewhere, Sabesp gained 1.2% after reporting strong Q4 2025 results and approving R$583.6 million in interest on equity for the fiscal year.

The Ibovespa rose 1.3% to close at 179,875 on Monday as markets stabilized following improved global sentiment and a partial retreat in oil prices after tankers successfully transited the Strait of Hormuz. While the index saw volatility earlier in the day reaching past the 181,000 mark it tempered gains as investors digested the latest Focus bulletin which raised inflation expectations for 2026 to 4.10% and the Selic rate projection to 12.25%. Brazil's economic activity as measured by the IBC-Br index grew 0.8% in January which slightly missed market expectations but helped maintain a constructive view on the domestic recovery trajectory. Major players like Petrobras and Vale ended the session in positive territory, bolstered by improved international risk appetite and despite persistent concerns regarding domestic fiscal policy and long-term interest rates.

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%.