Ibovespa Rises as Labor Market Shows Signs of Cooling

The Ibovespa gained 0.5% to close at 183,828 on Tuesday, as signs of gradual cooling in the labor market supported credit-sensitive sectors. Brazil created 165,827 formal jobs in August, above forecasts of 95,700 and up from 58,568 in July, marking the highest result since March. Unemployment stood at 5.3% in the rolling quarter ended in August, matching expectations. Despite the strong payrolls figure, the data remains consistent with a scenario of gradual labor-market cooling, in line with expectations for GDP to be near flat in 3Q26. Yields moved lower as the data did not dent expectations for a continuation of the Selic easing cycle. Financials rose, with BB up 2.6% and Itaú gaining 1.4%. Utilities also advanced, with Axia up 0.7%. Petrobras rose 0.8% despite lower oil prices. Vale shed 2.2% as iron ore prices fell, while CSN Mineração lost 5.7% after announcing a temporary reduction in low-grade iron ore production. Steelmakers fell, CSN sank 9.8%.

The Ibovespa edged lower to trade near 182,500 on Tuesday, weighed by losses in the energy and mining sectors. Petrobras lost more than 1% amid a pullback in oil prices as US and Iranian officials continued separate discussions with mediators. Vale shed over 1.5%, while CSN Mineração and Usiminas lost more than 3% each as iron ore prices fell. Iron ore prices in China closed lower, pressured by increased port arrivals and persistently weak steel demand ahead of a national holiday. CSN Mineração announced a temporary reduction in low-grade iron ore production due to higher freight costs and a challenging market environment. Steelmakers also fell, with CSN slumping 8%. On the data front, unemployment stood at 5.3% in the rolling quarter ended in August, unchanged from the previous quarter and matching expectations. Meanwhile, an Atlas/Bloomberg poll confirmed a technical tie between President Lula and Flávio Bolsonaro in a second-round scenario for the October presidential election.

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%.