Ibovespa Slides on Hawkish BCB Prospects

The Ibovespa shed nearly 1% to trade below 174,000 on Friday as robust GDP data reinforced the outlook of a hawkish BCB. Brazil’s economy grew 1.1% in the first quarter of 2026 from the previous quarter, the fastest pace in one year, fueling expectations that Central Bank of Brazil will leave rates higher for longer to tackle the high level of inflation. Banks posted led losses, with Itaú, Bradesco, and Santander down around 1%. Utilities also posted sharp declines, with Axia and Sabesp losing nearly 2%. Meanwhile, Petrobras fell over 1% as oil prices retreated on renewed hopes for a US-Iran peace deal after both sides agreed on a framework pending approval from US President Donald Trump. Other notable laggards included Ambev (-1.2%) and WEG (-1%).

The Ibovespa fell 0.4% to close at 175,063 on Thursday, pressured by expectations of higher interest rates. Brazil’s IGP-M rose 0.84% in May, slightly above forecasts, while Citi raised its year-end Selic rate projection to 13.75% from 13.25%. Meanwhile, the unemployment rate fell to 5.8% in the rolling quarter through April, below market expectations and the lowest reading for the period on record. Rate-sensitive stocks weighed on the index, with Itaú down 0.8% and Bradesco losing 0.6%. Petrobras also declined 0.7% on expectations of normalization of the oil flow in the Strait of Hormuz amid reports that the US and Iran agreed on a proposal to extend their ceasefire, pending approval from the US president.

The Ibovespa fell more than 0.5% to 175,000 on Thursday amid the outlook of high interest rates and renewed geopolitical tensions. Oil prices rebounded after Iran said it had attacked a US air base in response to fresh US strikes, reviving stagflation fears and pushing bond yields higher globally. Also, the IGP-M rose 0.84% in May, slightly above forecasts, while Citi raised its year-end Selic forecast to 13.75% from 13.25%. Meanwhile, the national unemployment rate was at 5.8% in the April moving quarter, below market expectations and the lowest in the period on record. Consequently, rate-sensitive stocks weighed on the index, with Itaú down more than 1% and Bradesco losing nearly 1%. Vale shed over 0.5% on lower iron ore prices, while Petrobras rose 0.4% as oil prices advanced.