Ibovespa Rises Ahead of BCB Policy Rate Decision

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.

The Ibovespa rose about 1% to hover above 167,000 on Wednesday ahead of the BCB’s monetary policy decision. Copom is expected to decide whether to 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 over 2%, Bradesco gaining nearly 2% and Santander rising more than 1%. Exporters also attracted attention as the Republican Party’s defeat in the US midterms opened a potential avenue for Brazil to negotiate tariffs imposed by the Trump administration. CSN gained 2.5% and Gerdau rose nearly 1%. Petrobras fell about 1% as oil prices declined.

The Ibovespa fell 1.5% to close at 165,362, reaching a one-year low following Monday’s holiday, as Petrobras and credit-sensitive stocks posted losses. Petrobras dropped 4% as oil prices plunged during the holiday amid signs of progress in US-Iran diplomacy. Investors monitored the upcoming Copom decision after the first Focus Bulletin since the election showed higher forecasts for inflation, interest rates and the dollar. In contrast, growth expectations were revised down. The S&P Global Brazil Manufacturing PMI for October also remained in contraction territory. Most market participants expect the benchmark Selic rate to remain unchanged at 13.75% per year, amid concerns over the country’s fiscal outlook. Major banks posted losses, with Itaú down 0.6% and Bradesco shedding 2.2%. Utilities declined as well, with Axia falling 2.3%.