Ibovespa Hits Seven-Month Low

The Ibovespa tumbled 2.5% to close at 167,875 on Tuesday, its lowest close since January 20th and the sharpest decline since March 12th. JPMorgan downgraded Brazilian equities to neutral within Latin America, citing weaker growth, deteriorating credit conditions, higher-for-longer interest rates, and increased volatility ahead of the presidential election. The bank also cut its year-end Ibovespa target. In its minutes, Copom said inflation remains pressured by demand and requires a restrictive monetary policy stance. July's inflation reading also added to concerns, coming in slightly above forecasts. Political risk also rose after a new election poll showed President Lula widening his lead over Flávio Bolsonaro, as investors remain focused on the potential fiscal direction of the next government. Banks fell sharply, with Banco do Brasil down 3.7%, Bradesco losing 2.3%, and Itaú shedding 3.5%. Petrobras fell 1.3% despite higher oil prices, while Vale declined 2%.

The Ibovespa edged down to trade below 172,000 on Tuesday following the release of July’s inflation data and the minutes from Copom’s latest meeting. Brazil’s annual inflation rate eased to 4.44% in July 2026 from 4.64% in June, in line with forecasts and returning to within the central bank’s 1.5%-4.5% target range. In the minutes, the monetary authority said that although monetary policy is making a decisive contribution to the disinflation process, inflation remains pressured by demand, requiring a restrictive policy stance. Financials traded mostly lower, with Caixa extending losses by nearly 3% after reporting a 0.2% quarter-on-quarter decline in adjusted net income and a 0.8% year-on-year drop in financial income. BTG fell more than 2% despite reporting its strongest semester on record. B3, down 0.3%, is set to release its results later today. Petrobras shed nearly 0.5% as the oil rally lost momentum. Vale gained more than 0.5% as iron ore prices rose on signs of tighter supply.

The Ibovespa edged 0.2% lower to close at 172,180 on Monday as oil prices jumped after prospects for an agreement to reopen the Strait of Hormuz weakened. US President Donald Trump criticized Iran's demands for war compensation, while Tehran said Washington must lift its blockade before agreeing to fully reopen the waterway. Higher energy prices reignited inflation concerns, weighing on banks and the broader index. Itaú shed 0.8% and Bradesco lost 0.7%. Axia dropped 2.3% despite brokerages highlighting significant dividend potential and raising their price targets. Petrobras gained 3.3% on higher oil prices, while Vale added 1.3% despite lower iron ore prices. Embraer climbed 2.3% following a better-than-expected 2Q26 earnings report. Itaúsa shed 0.7% ahead of its results, due after the close, while Caixa Seguridade (-2%), Natura (-2.4%), and JBS (-1.7%) are also scheduled to report.