Ibovespa Soars on Lower Oil Prices

The Ibovespa rose over 3% to trade above 181,000 on Monday as conciliatory remarks from US President Trump improved the outlook on global energy prices. The more moderate tone from Washington eased fears of broader escalation in the Middle East conflict, pulling down oil prices that had previously spiked and raised stagflation concerns. The drop in crude eased energy-driven inflation fears, helping lower bond yields and supporting credit-sensitive sectors. Major banks traded higher, with Bradesco up more than 3.5%. Other heavyweights, including Axia, Embraer, and Rede D'Or, also gained over 3%. Petrobras lost about 0.4% as oil prices fell.

The Ibovespa tumbled 2.3% to 176,219 on Friday marking its fourth consecutive weekly decline amid intensifying Middle East conflict. This retreat represents a fundamental transition toward the pricing of global geopolitical shocks as the real plummeted and future interest rates rose broadly. Despite the BCB previously delivering a smaller than expected 25 basis point cut the outlook for further easing has darkened as war driven energy costs push inflation projections away from the 3% target. Major banks were decimated with Santander and Itaú Unibanco falling around 2% while B3 Sa Brasil Bolsa Balcao fell over 4%. Even commodity giants Vale and Petrobras were unable to escape the risk aversion falling 2.1% and 2.6% respectively as traders weighed the potential for prolonged disruption to global trade flows.

The Ibovespa lost nearly 1% to trade below 179,000 on Friday, as investors digest a more hawkish tone from central banks amid Middle East tensions, with warnings that the conflict could reignite inflation. On Thursday, the BCB delivered a 25 basis point cut, half of the 50 basis point cut previously expected, and warned that war-driven surges in energy and commodity prices are pushing inflation projections away from the 3% target, leaving the rate outlook uncertain. Banks extended losses, with Itaú down over 1% and Bradesco falling more than 0.5%. Utilities also declined, with Sabesp down nearly 1.4%. Other laggards included Ambev, WEG, and Rede D'Or, all down around 1%. In contrast, Petrobras advanced, still benefiting from higher oil prices amid the Strait of Hormuz blockade.