Ibovespa Rises Following Election Polls and US Inflation

The Ibovespa rose about 1% to hover around 185,500 on Wednesday following new election polls indicating a tighter race and softer-than-expected US PCE inflation. President Lula and Flávio Bolsonaro entered the final days before the presidential election in a technical tie in a likely second round, according to Meio/Ideia and Indexa/Broadcast polls. The Meio/Ideia poll showed the candidates separated by just 0.5 percentage points in a potential runoff. Meanwhile, US PCE inflation came in slightly below estimates, easing some concerns over further Fed rate hikes. In contrast, Brazil’s PPI rose 2.5% year over year in August after increasing 1.9% in July. Major banks gained, with Itaú up more than 1% and Bradesco and BB rising over 1.5% each. Utilities also advanced, with Sabesp gaining 2%. Petrobras rose more than 1% as the oil rally resumed. Vale rebounded nearly 1% from Tuesday’s losses as Chinese iron ore prices rose.

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.