Ibovespa Closes Flat After 11-Session Rally

The Ibovespa closed flat at 185,188 on Thursday, ending an 11-session winning streak. The index had climbed nearly 2% at the open before investors took profits. The rally had been supported by recent election polls showing President Lula narrowing his lead over Flávio Bolsonaro, who is viewed by markets as more fiscally restrictive amid elevated yields and weak business activity. A Datafolha poll was due later Thursday. Meanwhile, although the latest economic activity data pointed to a second consecutive contraction in private-sector activity, the downturn was less severe than in the previous month. Services activity rebounded slightly as demand conditions showed signs of stabilisation. Major banks helped offset losses, with Itaú up 1.2%, Santander gaining 1.7%, and Banco do Brasil adding 0.8%. Embraer rose 1.5% after announcing a cybersecurity business combination with SPX Capital. CSN surged 6.7% after announcing a change of CEO. Vale fell 2.9% and Petrobras declined 1.3%.

The Ibovespa gained over 1.5% to trade above 188,000 on Thursday, extending the previous session’s rally and heading for a 12th consecutive session of gains ahead of a new election poll. Datafolha’s poll is due later Thursday, following a Quaest poll released on Wednesday that showed President Lula and Senator Flávio Bolsonaro, seen by markets as more fiscally restrictive amid elevated yields and weak business activity, in a technical tie in a potential runoff. Shares of major banks rose, with Itaú up 1.5%, Bradesco gaining about 1% and Banco do Brasil advancing nearly 2%. Among other financials, Itaúsa rose nearly 2% and B3 gained almost 3%. Utilities also advanced, with Axia and Sabesp adding around 1.5%. Petrobras rose nearly 1.5% as oil prices climbed amid escalating Middle East tensions. Vale gained nearly 1% on higher iron ore prices. Among steelmakers, CSN soared near 20% after announcing that Benjamin Steinbruch would step down as CEO and be replaced by Fabio Schvartsman.

The Ibovespa jumped 3% to close at 185,205 on Wednesday, nearing a four-month high after a new election poll showed President Lula and Senator Flávio Bolsonaro in a technical tie. Both candidates recorded 42% and 41% of voting intentions, respectively, in a potential runoff. Markets view Bolsonaro as more fiscally restrictive amid elevated yields and weak business activity. Bond yields fell after GDP data showed a contraction in consumer spending, while industrial production rebounded less than expected. Financials rallied, with Banco do Brasil up 4.9% and Itaú 3.8%. B3 gained 3.8% after tax assessments totaling R$2.2 billion were canceled. Utilities also gained, Axia rose 3.4% and Sabesp 4.2%. Vale gained 3.2% despite lower iron ore prices, while Petrobras added 2.8% as oil rebounded. Magazine Luiza jumped 16.9% on a Mercado Livre partnership, while Azzas surged 11.3% after agreeing to split its businesses into two listed companies.