Ibovespa Slips as Energy Stocks Decline

The Ibovespa fell about 0.5% to below 184,000 on Friday as losses in the energy sector weighed on the index. Oil prices fell amid reports that the US and Iran were considering a deal that could reopen the Strait of Hormuz and lift the US blockade on Iranian ports. Petrobras fell more than 1%, while Prio shed nearly 2%. The pullback in oil offered some respite to credit-sensitive sectors that have been under pressure from energy-driven inflation concerns. Brazil's mid-month inflation data limited gains, coming in above forecasts. Financials edged higher. Utilities also rose, with Axia adding more than 1% after approving an additional capital allocation of up to R$4 billion, related to second-quarter results, for the redemption of Class C preferred shares. Magazine Luiza rose nearly 3% after S&P reaffirmed its brAA- rating. WEG was little changed despite announcing an expansion of its project for a new battery energy storage systems plant under construction in southern Brazil.

The Ibovespa fell 1% to close at 183,966 on Thursday, posting broad-based losses after a volatile session amid an unfavorable external environment. US Treasury yields soared to multi-decade highs as expectations of another Fed hike this year increased, while energy-driven inflation concerns persisted. Crude oil and global yields were volatile late in the session, with an upward trend. The BCB’s monetary policy report said the recent oil price shock has not yet generated significant inflationary pass-through through indirect effects on the Brazilian economy, despite direct impacts on prices. The BCB also cut its 2026 GDP growth forecast. Meanwhile, the federal government reduced the amount blocked in the 2026 budget despite concerns over elevated government spending. Financials closed lower, with BB down 2.8%, utilities also fell, with Axia losing 1.6%. Vale fell 1.1% as higher freight costs pressured Brazil’s iron ore exports to Asia. Petrobras lost 0.7% despite higher oil prices.

The Ibovespa hovered near the flatline at around 186,000 on Thursday following the release of the BCB’s monetary policy report. The BCB said the recent oil price shock has not yet generated significant inflationary pass-through through indirect effects on the Brazilian economy, despite direct impacts on prices. The central bank also cut its 2026 GDP growth forecast to 1.8% from 2.0% in June. Meanwhile, the federal government decided to reduce the 2026 budget spending block by R$1.9 billion, bringing the total amount blocked to R$16.1 billion, amid concerns over elevated government spending. Financials posted losses, with Bradesco and BB down about 0.5% each, while B3 shed nearly 1%. Utilities also fell, with Axia down 0.5%. Other notable laggards included WEG (-2%) and Embraer (-1%). In contrast, Petrobras rose more than 0.5% as oil prices climbed on Middle East tensions. Likewise, Vale added nearly 0.5% amid iron ore supply concerns in Brazil.