Ibovespa Rises Following Election Runoff Polls

The Ibovespa rose about 1% to near 208,000 on Friday following the release of the first polls for the presidential runoff. A Datafolha poll showed Senator Flávio Bolsonaro with 49% of voting intentions against 45% for President Lula, a statistical tie at the limit of the survey’s two-percentage-point margin of error. An Atlas/Bloomberg poll put Flávio ahead at 51.1%, compared with 45.7% for Lula, ending the statistical tie in the previous survey’s runoff scenario. Markets view Bolsonaro as more fiscally restrictive amid elevated domestic yields and weak business activity. His economic team is considering spending cuts equivalent to around 2% of GDP. Financials posted solid gains, with Banco do Brasil up nearly 2%, Bradesco and Itaú rising more than 1% and B3 adding about 2.5%. Utilities also advanced, with Axia up more than 1% and Sabesp gaining about 2%. Vale edged higher as iron ore prices stabilized after reaching multi-month lows amid weakening steel margins.

The Ibovespa rose 0.9% to close at 206,220 on Thursday ahead of the first Datafolha poll for the presidential runoff, due shortly after the close. A PoderData/Aya poll showed Senator Flávio Bolsonaro with 53% of valid votes, against 47% for incumbent Lula. In Sunday’s first-round election, Bolsonaro finished ahead of Lula, contrary to most polls, pushing the index to an all-time high on Monday, led by financial stocks. Markets view the senator as more fiscally restrictive amid elevated domestic yields and weak business activity. His economic team is considering spending cuts equivalent to around 2% of GDP. Financials traded mixed, with B3 gaining 2% and Bradesco falling 1.3%. Petrobras followed the sharp rise in international oil prices, gaining 2.1%. Retail stocks also supported the index, with Magazine Luiza jumping 5.6%. Meanwhile, Vale extended its losing streak to four sessions, falling 1.6% as iron ore prices hit an 18-month low in China.

The Ibovespa edged higher toward 205,000 on Thursday, supported by gains in the energy sector. Petrobras rose nearly 2% as oil prices surged on reports that the US is planning new strikes against Iran, risking the recent rebound in Middle Eastern oil exports. Meanwhile, the financial sector was mixed amid an unfavorable external backdrop and ahead of the first presidential runoff poll following the first round. Global yields also extended their rally as surging oil prices intensified inflationary pressures, while expectations of a hawkish Fed added to pressure on credit-sensitive stocks. Datafolha is due to release the first poll for the presidential runoff following Sunday’s first-round election, in which Flávio Bolsonaro finished ahead of Lula, contrary to most polls. The result pushed the index to an all-time high on Monday, led by financial stocks. On Thursday, Itaú and Bradesco fell about 1% each, while B3 gained 1% and Caixa and BB Seguridade rose nearly 0.5%.