Ibovespa Rises With Broad Gains

The Ibovespa rose 1.2% to close at 187,367 points on Tuesday following Monday’s holiday, posting broad-based gains. Petrobras rose 2.1% as oil prices surged following attacks on energy infrastructure in Saudi Arabia amid renewed hostilities in the Middle East. Banks also performed well, Bradesco rose 1.8% and Itaú advanced 1.2%, as the Focus survey released Tuesday continued to project lower inflation, raising the prospect of further interest-rate cuts. Meanwhile, a BTG/Nexus poll pointed to a technical tie between Flávio Bolsonaro and President Lula in a potential presidential runoff, although Flávio moved into a numerical lead of one percentage point. On Monday, a Quaest poll also showed the two tied at 41% in a second-round scenario. Flávio Bolsonaro is viewed by markets as more fiscally restrictive amid elevated yields and weak business activity. Sabesp gained 1.1% after brokerages raised their price targets following a meeting with the company’s management.

The Ibovespa jumped more than 1.5% to trade close to 188,000 on Tuesday following Monday’s holiday, posting broad-based gains. Petrobras rose more than 1.5% as oil prices surged following attacks on energy infrastructure in Saudi Arabia amid renewed hostilities in the Middle East. Vale gained about 2% as iron ore prices in China rose, driven by lower shipments and expectations of a seasonal recovery in Chinese demand. Meanwhile, a BTG/Nexus poll pointed to a technical tie between Flávio Bolsonaro and President Lula in a potential presidential runoff, although Flávio moved into a numerical lead of one percentage point. On Monday, a Quaest poll also showed the two tied at 41% in a second-round scenario. Flávio Bolsonaro is viewed by markets as more fiscally restrictive amid elevated yields and weak business activity. Major banks gained, with Itaú up more than 2% and Bradesco adding more than 1.5%. Utilities rose as well, with Axia gaining nearly 2%. WEG and Rede D’Or both rose about 2%.

The Ibovespa inched lower to close at 185,147 on Friday amid rising expectations for a US Fed rate hike in September. US payrolls increased by 162,000, about three times the consensus estimate, boosting rate hike bets. For Brazil, persistently high interest rates in the world’s largest economy narrow the policy path available to the BCB. The prospect of US interest rates remaining elevated for longer also reduces appetite for risk assets in emerging markets. Underperformers included Axia, down 0.8%, WEG, down 0.6%, and Rede D’Or. Petrobras lost 0.9% despite elevated oil prices, which remained volatile. Fnancial stocks gains limited losses, with Bradesco up 0.6%, Itaúsa adding 1.5%, BB Seguridade rising 1.1%, and Caixa advancing 1.1%. The latest Datafolha poll on the presidential race, released on Thursday, showed President Lula’s lead over Flávio Bolsonaro narrowing. Embraer rose 1.1% as Brazil posted a stronger-than-expected external trade surplus. The index rose 5.4% on the week.