Ibovespa Falls Following Jobs Data and Fed Decision

The Ibovespa fell more than 1% to trade below 175,500 on Wednesday as investors digested stronger-than-expected Brazilian labor market data and the Federal Reserve's policy decision. Brazil created a net 145,161 formal jobs in June, above market expectations of 115,000, reinforcing the resilience of the labor market and supporting expectations for a more hakwish BCB. The Fed left interest rates unchanged, as expected, though three FOMC members favored a rate hike, adding to concerns that global rates could remain higher for longer. Financials posted declines, with Itaú and Bradesco down 2%, Itaúsa losing 1.5%, and B3 falling 3%. Santander tumbled 7% after missing ROE expectations, while Axia lost more than 1% and Sabesp fell nearly 4%. Ambev erased earlier gains to trade 1% lower after its earnings-driven rally, while Vivo and TIM extended recent losses. Meanwhile, Petrobras added 2% on rising oil prices.

The Ibovespa fell nearly 1% to trade below 175,500 on Wednesday amid fresh Middle East tensions, while markets eased exposure to risk ahead of a Federal Reserve decision. Oil prices rose after joint US-Saudi strikes in Iraq, fueling inflation concerns. The Fed is expected to leave rates unchanged, although hawkish statements from FOMC members supported possible dissents for a hike. Financials led the decline, with Itaú, Bradesco, and Itaúsa down about 2%, while Santander tumbled 7% after missing ROE expectations. Utilities also weakened, with Axia down more than 1% and Sabesp losing 2%. Ambev erased earlier gains to trade slightly lower after surging as much as 16% on strong profit and EBITDA. WEG (-1%) and Rede D'Or (-2.5%) also declined. In contrast, Petrobras gained nearly 2.5% on higher oil prices and after Morgan Stanley reaffirmed its Overweight rating, citing expectations of strong second-quarter results following the company's production update.

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.