Ibovespa Falls as Higher Yields Weigh

The Ibovespa fell 0.8% to close at 169,019 on Friday as higher bond yields, fading expectations of monetary easing, and escalating hostilities in the Middle East weighed on sentiment. Iran-backed Hezbollah rejected a new Lebanon ceasefire proposal, while Israel said it would not withdraw its troops, undermining US diplomatic efforts with Iran. Meanwhile, stronger-than-expected US payrolls data pushed Treasury yields higher and reinforced expectations that the Federal Reserve may keep interest rates elevated for longer, magnifying gains in Brazilian rate futures. UBS also turned less constructive on Brazilian assets as prospects for aggressive Selic cuts faded, citing stronger domestic activity, higher oil prices linked to the Iran conflict, and persistent inflation pressures. Banco do Brasil fell 1.8%, while B3 lost 0.7%. Vale dropped 3.8% amid lower iron ore prices, and Petrobras declined 0.9%, tracking a pullback in international oil prices.

The Ibovespa fell more than 0.5% to below 169,500 on Friday amid higher bond yields and escalating hostilities in the Middle East. Iran-backed Hezbollah rejected a new Lebanon ceasefire proposal, while Israel said it would not withdraw its troops, undermining US diplomatic efforts with Iran. Oil prices remained elevated, fueling concerns about inflation, while a strong jobs report in the US added to bets of a Fed hike and magnified the increase in Brazilian rate futures. Likewise UBS turned less constructive on Brazilian assets as prospects for aggressive Selic cuts faded, citing stronger economic activity, higher oil prices linked to the Iran conflict, and persistent inflation pressures. B3 edged lower after a 5% drop in the previous session, while Itaú and Bradesco traded little changed. Utilities underperformed, with Auren down nearly 1% and Sabesp losing more than 1%. Vale also weighed on the index, shedding nearly 2% amid lower iron ore prices.

The Ibovespa fell 2.2% to close at 170,330 on Wednesday as investors assessed escalating trade tensions with the US, fading hopes for a US-Iran peace deal, and weak domestic economic data. President Luiz Inácio Lula da Silva convened a cabinet meeting after Washington proposed additional tariffs on imports from 60 economies, including Brazil. Meanwhile, oil prices rose as renewed hostilities in the Persian Gulf increased geopolitical uncertainty. Domestically, Brazil's services sector nearly stagnated in May, with firms citing competitive pressures, financial constraints, and weak demand. Financial stocks led losses, with Bradesco and Itaú down 2%, while B3 tumbled 4.7%. Vale retreated 3.8% amid lower iron ore prices. Healthcare and utility shares also underperformed, with Rede D'Or falling 3.3% and Auren shedding 3.1%.