Ibovespa Falls as Oil Rally Resumes

The Ibovespa fell 0.3% to close at 182,991 on Monday amid an unfavorable external backdrop, higher inflation projections and new election polls confirming a tight presidential race. Oil prices resumed their rally after US President Donald Trump rejected Iran’s latest proposal to reopen the Strait of Hormuz, renewing concerns that energy-driven inflation could keep interest rates elevated. Yields rose, pressuring credit-sensitive stocks. Major banks fell, with Itaú and Bradesco down 1% each. Meanwhile, the BCB’s Focus survey showed that the market raised its 2026 inflation forecast from 4.92% to 4.99%, while the year-end 2026 Selic forecast remained at 13.5%. A new election poll showed President Lula widening his lead over Flávio Bolsonaro, who is viewed by markets as more fiscally restrictive amid elevated domestic yields and weak business activity. Other notable laggards included Ambev (-0.8%), WEG (-1.9%) and Vivo (-2%). In contrast, Petrobras rose 1.5% and Vale added 0.5%.

The Ibovespa fell nearly 1% to below 182,500 on Monday amid a jump in oil prices and the release of a new Focus survey. Oil prices resumed their rally after US President Donald Trump rejected Iran’s latest proposal to reopen the Strait of Hormuz, renewing concerns that energy-driven inflation shocks could keep interest rates higher for longer. Yields moved higher, pressuring credit-sensitive stocks. Major banks fell, with Itaú, Bradesco and BB losing about 1%, while utilities also posted losses, with Sabesp shedding nearly 1%. Meanwhile, the BCB’s Focus survey showed that the market raised its 2026 inflation forecast, from 4.92% to 4.99%, while the year-end 2026 Selic forecast remained at 13.50%. A new election poll showed President Lula widening his lead over Flávio Bolsonaro, who is viewed by markets as more fiscally restrictive amid elevated domestic yields and weak business activity. Elsewhere, Vale fell 1% on lower iron ore prices. In contrast, Petrobras rose more than 1%.

The Ibovespa fell 0.3% to close at 184,477 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 2.4%. 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 closed higher. Utilities also rose, with Axia edging up 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 7.3% after S&P reaffirmed its brAA- rating. WEG added 0.6% after announcing an expansion of its project for a new battery energy storage systems plant in southern Brazil. The index fell 0.9% on the week.