Ibovespa Falls as US-Iran Tensions Lift Oil Prices

The Ibovespa lost 0.9% to close at 172,197 on Monday as signs of renewed escalation in the Middle East hurt risk appetite and revived concerns about inflation and interest rates. Although US President Donald Trump said Israel and Hezbollah had agreed to stop attacking each other in Lebanon and that talks with Iran were continuing, fresh violence threatened efforts to end the conflict. Oil prices spiked after reports that US-Iran negotiations had stalled, fueling stagflation fears and pushing bond yields higher. Banks led losses, with Itaú down 1.7%, Bradesco shedding 1.1%, and Itaúsa losing 1.2%. Meanwhile, the S&P Global Brazil Manufacturing PMI fell to 49.1 in May from 52.6 in April, signaling a renewed contraction in factory activity and weighing on industrial stocks such as WEG, which dropped 2.5%. Utilities also pressured the index, with Auren down 2.4%. In contrast, Petrobras gained 0.9%, supported by higher oil prices.

The Ibovespa fell more than 0.5% to trade below 173,000 on Monday as reports that Iran will halt communication with the US cast doubt on a ceasefire renewal. Oil prices rebounded, reviving stagflation concerns and pushing bond yields higher. Financial stocks came under pressure amid expectations of higher borrowing costs and a hawkish monetary outlook, with Santander losing 1% and Bradesco down about 0.5%. Meanwhile, the S&P Global Brazil Manufacturing PMI fell to 49.1 in May from 52.6 in April, signaling a renewed contraction in factory activity and weighing on industrial names such as WEG, which shed nearly 1%. Vale also pressured the index, falling around 1.5% as iron ore prices declined. In contrast, Petrobras gained more than 1%, supported by higher oil prices.

The Ibovespa lost 0.7% to close at 173,787 on Friday as stronger-than-expected GDP data reinforced the view that the current cycle of Selic rate cuts may be limited. Brazil’s economy grew 1.1% in the first quarter from the previous three months, accelerating from a 0.3% expansion in Q4 2025 and marking the strongest quarterly growth since Q1 2025. The data strengthened expectations of a hawkish BCB, pushing bond yields higher and weighing on equities. Banks led losses, with Bradesco down 1.1% and Banco do Brasil shedding 1.5%. Petrobras fell 1.2% as oil prices retreated after a deal to extend the US-Iran ceasefire renewed hopes for an end to the Middle East conflict. Vale also lost 1.4% despite higher iron ore prices.