Ibovespa Gains as BCB Rate Cut Bets Grow

The Ibovespa rose 0.7% to close at 176,565 on Tuesday after Brazil's mid-July inflation report came in below expectations. Annual inflation slowed to 4.52%, below forecasts of 4.67% and down from 4.8% in June. The softer reading, together with June's lower-than-expected inflation data, reinforced expectations of a 25-basis-point Selic rate cut next week. Financials led the gains, with Banco do Brasil up 1.6% and B3 adding 1.8%. Bradesco (+0.3%) and Santander (+2.2%) are due to report earnings tomorrow. Utilities also rose, with Axia rising 1.9%. Ambev gained 1.5% ahead of its earnings release on Thursday. WEG extended gains, rising 0.6% after Goldman Sachs upgraded the stock to Neutral from Sell, citing more balanced market expectations. In contrast, Vivo (-6.3%) and TIM (-5.8%) tumbled after reporting results. TIM's mobile service revenue growth slowed to its weakest pace since 2021, while Vivo saw an 8% increase in depreciation and amortization expenses.

The Ibovespa rose 1% to trade above 177,000 on Tuesday after Brazil's mid-July inflation report came in below expectations. Annual inflation slowed to 4.52%, below forecasts of 4.67% and down from 4.8% in June. The softer reading, together with June's lower-than-expected inflation data, reinforced expectations of a 25-basis-point Selic rate cut next week. Financials posted gains, with Itaú, Itaúsa, and Banco do Brasil up around 1.5%, while Bradesco gained nearly 2%. Bradesco and Santander (+2%) are due to report earnings on Wednesday. Utilities also advanced, with Axia rising nearly 3% and Sabesp adding almost 1.5%. Ambev gained about 2% ahead of its earnings release on Thursday. WEG extended recent gains, rising 1% after Goldman Sachs upgraded the stock to Neutral from Sell, citing more balanced market expectations. The company secured a contract from ENGIE Brasil to supply generating units for the R$1.2 billion Jaguara hydroelectric plant expansion project.

The Ibovespa rose 0.7% to close at 175,335 on Monday as a pause in the Middle East conflict sent oil prices lower and eased inflation concerns. Crude prices fell after the US and Iran halted strikes over the weekend amid renewed diplomatic efforts, with President Trump reportedly open to restarting peace talks. The pullback in oil prices supported financials, with Itaú gaining 1.4%, Bradesco rising 1.2%, and Itaúsa advancing 2%. Utilities moved higher, led by Axia (+2%) and Sabesp (+1.7%). WEG gained 0.9% after Bradesco BBI upgraded the stock to Outperform and JPMorgan raised its rating to Overweight. The company also secured a contract to supply two generating units for Engie's Jaguara hydroelectric plant expansion. Embraer jumped 5.3% after reporting a record second-quarter backlog of $34.5 billion. In contrast, Petrobras fell 2.8% as lower oil prices weighed on the stock. Investors will focus on July's mid-month inflation report on Tuesday for clues on the monetary policy outlook.