Ibovespa Nears One-Year Low as Oil Extends Monday's Plunge

The Ibovespa fell 0.8% to close at 168,191 points, erasing earlier gains as a sharp selloff on Wall Street weighed on global equity markets. Shares of companies linked to semiconductors and data centres came under pressure after Democratic gains in the US midterm elections raised concerns about increased regulatory scrutiny of the rapid expansion of AI. Meanwhile, investors remained focused on Brazil’s fiscal outlook, particularly the government’s commitment to controlling public spending and debt, which has risen significantly in recent years. The BCB kept the Selic rate unchanged at 13.75% amid a challenging economic backdrop of weaker growth, higher inflation and increased uncertainty following President Lula’s reelection. Losses were broad-based. Notable laggards included WEG (-3.5%) and Embraer (-5%), while Petrobras lost 3% and Bradesco fell 2.1%. In contrast, Vale gained 0.5%, supported by higher iron ore prices. Ambev also added 1.5%, while Itaú rose 0.6%.

The Ibovespa edged higher on Thursday, hovering near 168,000, after the BCB held the Selic rate at 13.75%, pausing its easing cycle. The decision came amid a challenging outlook marked by weaker growth, higher inflation and heightened uncertainty following President Lula’s reelection. Expectations were divided, with some investors anticipating a hold and others pricing in a sixth consecutive 25 bps cut. Policymakers cited higher inflation expectations, increased uncertainty and a “more pronounced deceleration” in economic activity. Credit-sensitive stocks were mixed. Major banks were mostly subdued, with Itaú and Bradesco edging higher, while Banco do Brasil fell over 0.5%. Utilities mostly declined, with Axia down more than 1%. Elsewhere, Petrobras rebounded nearly 2% alongside higher oil prices after plunging over 7% on Wednesday when the commodity sank. Vale gained nearly 1% as iron ore prices rose.

The Ibovespa rose 1% to close at 167,292 on Wednesday ahead of the BCB’s monetary policy decision. Copom is expected to either cut the Selic rate again or hold it at 13.75%. The latest Focus survey points to a possible reduction to 13.50%, although inflation concerns, a stronger US dollar and fiscal risks have added uncertainty. At its September meeting, Copom cut the rate from 14% to 13.75% but stressed the need to monitor risks before further easing. Financial stocks advanced, with Itaú up 2.9% and Bradesco gaining 3%. Exporters also rallied on hopes of progress in trade talks following the Republican Party’s defeat in the US midterms. WEG rose 1.9%, Embraer gained 2.9% and CSN jumped 4.6%, while CSN Mineração soared 16.5%, also supported by the planned sale of CSN’s cement subsidiary. Higher iron ore prices lifted the mining sector, with Vale up 3.7%. Petrobras, however, sank 7.4% as oil prices plunged.