Ibovespa Falls on Inflation and GDP Outlook

The Ibovespa fell over 0.5% to hover below 208,000 on Tuesday, weighed down by losses in major banks, utilities and mining stocks. The Focus survey raised its 2026 inflation forecast to 5.22% from 5.01%, marking a fourth consecutive increase, while the Selic benchmark rate remained unchanged at 13.25%. The IMF also lowered its growth projections for Brazil, cutting its 2026 GDP growth estimate to 2.2% from 2.4%. The fund attributed the slowdown expected between 2026 and 2027 to restrictive interest rates aimed at bringing inflation back to target, the withdrawal of fiscal stimulus and global uncertainty. Major banks declined, with Itaú down nearly 1.5% and Bradesco losing about 1%. Utilities also fell, with Sabesp down nearly 2%. Miners weakened as abundant global supply, elevated Chinese inventories and lower shipping costs continued to pressure iron ore prices. Vale shed nearly 1%.

The Ibovespa rose 1.4% to close at a record 209,067 on Friday as the first voting-intention polls released after the first round confirmed Flávio Bolsonaro’s lead over President Lula in the runoff. Markets view Bolsonaro as more fiscally restrictive, strengthening expectations that a potential administration could tighten control over public spending and improve Brazil’s fiscal position. The race remains tight, with some polls showing a statistical tie. Financial stocks were mostly higher, with Itaú up 2.3%, BB and Itaúsa gaining 1.6% each, and B3 advancing 2.5%. Petrobras rose 0.9% despite volatile oil prices. Vale turned positive late in the session, closing up 0.38% in a narrow range after iron ore prices hit multi-month lows. Retailers posted sharp gains as yields fell following the polls, despite rising inflation and a reading above the upper limit of the BCB’s target range. Magazine Luiza soared 19.2%. The Ibovespa gained 8.82% this week, its strongest weekly performance of 2026.

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.