Ibovespa Falls on Inflation Fears

The Ibovespa fell nearly 1% to trade below 188,000 on Tuesday as investors awaited earnings reports while monitoring inflation data and rising oil prices. Vale and WEG, both down 1%, are scheduled to report earnings today and tomorrow respectively. On the data front, mid-month inflation rose to 4.4% in April from 3.9% in March. With the Strait of Hormuz effectively closed, fears of an energy shock sparking global inflation persist. Although the central bank is expected to cut interest rates on Wednesday, investors worry that energy-driven stagflation could force a more hawkish stance later this year. Banks traded lower, with Itaú down 0.4% and Bradesco shedding 0.8%. Utilities also declined, with Axia down 1.1% and Sabesp falling 2.5%. In the telecommunications sector, both Vivo and TIM lost nearly 3%. In contrast, Petrobras gained 1% on rising oil prices.

The Ibovespa fell 0.6% to close at 189,579 on Monday as investors prepared for a week of earnings and central bank decisions. Brazil’s central bank is set to announce its decision on Wednesday, with markets expecting a 0.25 percentage point cut in the Selic rate despite a recent jump in headline inflation. The US Fed is expected to hold rates unchanged. Global oil prices rose due to stalled US Iran peace talks, heightening inflation concerns and leading investors to largely rule out rate cuts in developed markets this year. Major banks posted losses, with Itaú down 0.9%, and Bradesco and Banco do Brasil shedding 0.8%. Utilities also traded lower, with Axia down 0.7% and Sabesp losing 1.4%. Petrobras rose 0.4% on higher oil prices. Gerdau gained 0.9% ahead of its earnings release, while WEG, also scheduled to report this week, was up 0.8%. In contrast, Vale lost 0.4% ahead of its results on Tuesday.

The Ibovespa traded near the flat 190,000 level on Monday as investors prepared for a week of earnings and central bank decisions. Brazil’s central bank is set to announce its decision on Wednesday, with markets expecting a 0.25 percentage point cut in the Selic rate despite the recent jump in the headline inflation. In turn, the US Fed is set to hold rates unchanged. Global oil prices rose due to stalled US-Iran peace talks, heightening inflation concerns and leading investors to largely rule out rate cuts in developed markets this year. Major banks traded near flat, with Bradesco and Banco do Brasil each up 0.2%. Petrobras gained 0.5% on higher oil prices. Gerdau (+1%) is scheduled to release earnings today after the close, Vale (+0.1%) will report on Tuesday, and WEG is set to announce results on Wednesday.