Brazilian Stocks Close Lower Amid Election Uncertainty

The Ibovespa fell 0.9% to close at 206,495 on Wednesday amid election-related uncertainty. The index opened higher but reversed course after a Quaest poll showed challenger Flávio Bolsonaro and incumbent President Lula nearly tied in the presidential runoff. The survey also found that 52% of respondents would “never” vote for Bolsonaro, compared with 47% for Lula, whose rejection rate fell six percentage points in a week. Although Bolsonaro has yet to detail his policy plans, investors view his candidacy as more likely to bring fiscal reforms that could pave the way for lower interest rates. Credit-sensitive stocks came under pressure, with financials mostly lower. Bradesco edged down, BB fell 0.4%, Itaúsa lost 0.6% and B3 erased earlier gains to close 0.8% lower. Retailers also mostly declined, with Magazine Luiza dropping 3.4%. Elsewhere, WEG plunged 7.3% after disappointing third-quarter margins. Vale fell 2.1% on lower iron ore prices. Petrobras lost 0.8% amid volatile oil prices.

The Ibovespa edged lower toward the 208,000 mark on Wednesday following a new poll on the presidential runoff between Senator Flávio Bolsonaro and President Lula. A Quaest poll showed a one-percentage-point gap between the candidates, with Flávio Bolsonaro at 45% and Lula at 44%. Given the margin of error of two percentage points, the race remains statistically tied. Compared with last week’s poll, however, Flávio’s support slipped by one percentage point. Although Bolsonaro has yet to detail his policy plans, investors view him as more likely to bring fiscal reforms that could help lower interest rates. Financial stocks were mixed, with Itaú and Bradesco edging higher, while Itaúsa and Caixa fell more than 0.5%. BB Seguridade gained nearly 0.5%, and B3 rose more than 1%. Elsewhere, WEG plunged nearly 5% after reporting net income below expectations. Vale shed more than 1% amid falling iron ore prices, while Petrobras edged lower as oil prices remained volatile.

The Ibovespa rose 1.6% to close at 208,296 on Tuesday, supported by a new election poll and a positive external backdrop. A Real Time Big Data poll released on Monday showed Flávio Bolsonaro leading President Lula in a presidential runoff, with 52% of valid votes against 48%. Although Bolsonaro has yet to detail his policy plans, investors view his candidacy as more likely to bring fiscal reforms, including spending cuts, which could help lower interest rates. Meanwhile, easing oil prices provided relief to credit-sensitive sectors pressured by energy-driven inflation. Major banks advanced, with Itaú and Bradesco each gaining around 2.9%. Among other financials, B3 jumped 5.4%. Utilities also rose, with Axia up 0.9%, while retailers posted sharp gains, led by Magazine Luiza, which soared 14.8%. In contrast, Vale fell 1.4% as Chinese iron ore prices declined.