Ibovespa Falls on Earnings Weakness

The Ibovespa edged lower, hovering near 205,500 on Thursday amid speculation over the presidential race and corporate earnings. On Wednesday, a Quaest poll showed Flávio Bolsonaro’s lead over Lula narrowing to one percentage point, leaving the candidates statistically tied just four days before Sunday’s presidential runoff. Many market participants believe a Flávio administration would be more likely to rein in public spending, although neither the candidate nor his economic advisers have outlined concrete fiscal adjustments. Datafolha is scheduled to release a new presidential voting-intention poll after the market close today. Financial stocks fell, with Itaú down 0.8%, and Bradesco shedding 1% ahead of its earnings due later today. Vale dropped 2% amid falling iron ore prices, with the miner set to report results next week. WEG slipped 0.1% after plunging 7% yesterday on disappointing results. Petrobras (+1%) helped limit losses in the index, supported by a resume in the oil rally.

The Ibovespa fell 0.9% to close at 206,495 on Wednesday amid election-related uncertainty. The index opened higher but reversed course after a Quaest poll showed challenger Flávio Bolsonaro and incumbent President Lula nearly tied in the presidential runoff. The survey also found that 52% of respondents would “never” vote for Bolsonaro, compared with 47% for Lula, whose rejection rate fell six percentage points in a week. Although Bolsonaro has yet to detail his policy plans, investors view his candidacy as more likely to bring fiscal reforms that could pave the way for lower interest rates. Credit-sensitive stocks came under pressure, with financials mostly lower. Bradesco edged down, BB fell 0.4%, Itaúsa lost 0.6% and B3 erased earlier gains to close 0.8% lower. Retailers also mostly declined, with Magazine Luiza dropping 3.4%. Elsewhere, WEG plunged 7.3% after disappointing third-quarter margins. Vale fell 2.1% on lower iron ore prices. Petrobras lost 0.8% amid volatile oil prices.

The Ibovespa edged lower toward the 208,000 mark on Wednesday following a new poll on the presidential runoff between Senator Flávio Bolsonaro and President Lula. A Quaest poll showed a one-percentage-point gap between the candidates, with Flávio Bolsonaro at 45% and Lula at 44%. Given the margin of error of two percentage points, the race remains statistically tied. Compared with last week’s poll, however, Flávio’s support slipped by one percentage point. Although Bolsonaro has yet to detail his policy plans, investors view him as more likely to bring fiscal reforms that could help lower interest rates. Financial stocks were mixed, with Itaú and Bradesco edging higher, while Itaúsa and Caixa fell more than 0.5%. BB Seguridade gained nearly 0.5%, and B3 rose more than 1%. Elsewhere, WEG plunged nearly 5% after reporting net income below expectations. Vale shed more than 1% amid falling iron ore prices, while Petrobras edged lower as oil prices remained volatile.