Brazil Shares Fall Ahead of BCB Decision

The Ibovespa fell 0.4% to close at 169,648 on Tuesday as investors assessed fresh election polls and rising inflation expectations. A BTG/Nexus survey released on Monday showed President Lula holding a nine-point lead over Senator Flávio Bolsonaro in first-round voting intentions. Meanwhile, the median forecast for Brazil’s annual inflation increased for the 14th consecutive week, prompting markets to reassess how long the BCB may keep interest rates elevated. Most sectors ended lower. Financial stocks traded mixed amid concerns that higher borrowing costs could weigh on lending activity, with Bradesco falling 0.7%. Petrobras also pressured the index, declining 1.3% as optimism surrounding a preliminary US-Iran peace agreement raised the prospect of the Strait of Hormuz remaining open.

The Ibovespa fell about 0.5% to hover near the 169,500 mark on Tuesday as investors digested fresh election polls and rising inflation expectations. According to a BTG/Nexus survey released on Monday, President Lula holds a nine-point lead over Senator Flávio Bolsonaro in first-round voting intentions. Meanwhile, the median forecast for Brazil’s annual inflation rose for the 14th consecutive week, prompting markets to reassess the duration of the BCB’s easing cycle. Most sectors traded lower. Financial stocks were pressured by concerns over higher borrowing costs, with Bradesco and Itaúsa losing around 0.5%. Petrobras weighed on the index, falling nearly 2% on optimism surrounding a preliminary US-Iran peace agreement that could reopen the Strait of Hormuz. In contrast, Sabesp gained more than 1.5% after announcing that Claudio Kawa Hermolin had assumed leadership of the newly created Customer Experience Division.

The Ibovespa fell 0.4% to close at 170,415 on Monday after the latest Focus survey showed inflation expectations continuing to rise. The median forecast for annual inflation in 2026 increased for the 14th consecutive week, from 5.11% to 5.30%, moving further above the BCB's upper target limit of 4.5%. Meanwhile, the median forecast for the Selic rate at the end of 2026 rose from 13.5% to 13.75%. Concerns over a more hawkish BCB weighed on banks, with Bradesco falling 0.8% and Itaú losing 0.5%. Petrobras also dragged on the index, dropping 5.1% as oil prices fell after the US and Iran announced a preliminary peace agreement that would reopen the Strait of Hormuz. In contrast, Vale climbed 2.5% as iron ore prices rose on supply concerns linked to a potential strike by BHP workers in Australia. Embraer jumped 7.1% after Azorra finalized a deal to acquire 15 aircraft.