Ibovespa Falls as Middle East Tensions Weigh

The Ibovespa shed about 0.5% to trade below 177,000 on Thursday on escalating Middle East tensions. Oil prices surged after renewed attacks heightened concerns over global energy supplies. Houthi rebels said they had struck two Saudi oil tankers as part of a naval blockade, adding to disruptions caused by Iran's near-total closure of the Strait of Hormuz. The spike in oil prices reignited inflation concerns, fueling expectations that interest rates could remain higher for longer. Financials traded lower, with Itaú, Bradesco, and Itaúsa retreating about 1%. Utilities also posted losses, with Axia down 1% and Sabesp losing more than 1.5%. WEG slipped about 0.5% after soaring 10% in the previous session on strong operating margins and return on invested capital. Other notable laggards included Ambev (-0.7%), Rede D'Or (-3%), and Embraer (-1%). In contrast, Petrobras gained 1.5% on higher oil prices.

The Ibovespa rose 2.4% to close at 177,548 on Wednesday, supported by strong corporate earnings. Vale advanced 4% after reporting that iron ore production rose 0.8% year-on-year in the April-June period, marking its strongest second-quarter output since 2018. Bradesco BBI reiterated its Buy rating after the company's sales volumes exceeded expectations. WEG jumped 10% after reporting healthy operating margins and return on invested capital in the second quarter, despite lower year-on-year EBITDA and revenue. Revenue from international markets increased 14.7% in US dollar terms, although the company said the appreciation of the Brazilian real weighed on reported revenue in local currency. Petrobras rose 2.2% as oil prices climbed amid escalating tensions in the Middle East. On the trade front, a 25% US tariff on a range of Brazilian products took effect on Wednesday. However, key exports including beef, coffee, rare earths, energy products, aircraft, and aircraft parts remain exempt.

The Ibovespa rose over 1% to trade above 175,000 on Wednesday, supported by strong corporate results. Vale advanced near 2% after reporting that iron ore production rose 0.8% year-on-year in the April-June period, its strongest second-quarter output since 2018. Bradesco BBI reiterated its Buy rating after the company's sales volumes exceeded expectations. WEG jumped near 8% after reporting healthy operating margins and return on invested capital in the second quarter, despite lower year-on-year EBITDA and revenue. Still, revenue from international markets increased 14.7% in US dollar terms, the company said the appreciation of the real weighed on reported revenue in local currency. Petrobras rose over 1% as oil prices climbed amid escalating tensions in the Middle East. On the trade front, a 25% US tariff on a range of Brazilian products took effect today. Key exports including beef, coffee, rare earths, energy products, aircraft, and aircraft parts are exempt.