The Ibovespa closed Tuesday’s session (the 1st) up 1.30% at 179,722.48 points, notching ten consecutive sessions of gains. The advance was driven by shares of Petrobras (PETR3 and PETR4), the banking sector and improved expectations about Brazil’s electoral process.
During the day, the index topped the 180,000-point mark but lost steam near the close. The move was also supported by inflows from investors, including foreigners, who bought call options on the EWZ ETF, the main Brazilian equity fund traded in New York, and on Petrobras shares. These trades generated extra demand in the cash market, supporting flows into domestic assets.
Impact of GDP Growth and the Exchange Rate
Bruno Perri, chief economist and partner at Forum Investimentos, highlighted the reaction to second-quarter Gross Domestic Product (GDP), which grew 0.5%, above the median estimate of 0.4%. However, some indicators point to a slowdown in economic activity, mainly in services and household consumption. According to Perri, this backdrop contributed to the decline in the short end of the yield curve.
The real also strengthened amid rising interest in Brazilian assets, even as the dollar gained against other currencies internationally. For the economist, the strengthening of the Brazilian currency is linked to the political environment, which has reduced the risk premium on investments in the country.
Petrobras and Oil on the Rise
Petrobras was again a highlight of the session, tracking the rise in oil prices driven by escalating tensions between the United States and Iran. PETR3 shares rose 4.14% and PETR4 gained 4.11%. November Brent crude closed at US$ 94.65 a barrel, up 4.6%, while WTI rose 5.2% to US$ 90.22.
The financial sector also contributed to the Ibovespa‘s gains. Banco do Brasil (BBAS3) rose 2.56%, while Itaú Unibanco (ITUB4) and Bradesco (BBDC4) closed in positive territory.
Influence of the Elections and Other Standout Stocks
Perri said election polls have increasingly influenced asset prices, stating that the market is entirely focused on the elections. He added that a more intense race could trigger significant swings in stocks, the currency and interest rates.
Among the day’s biggest gainers, CSN (CSNA3) jumped 7.89%, boosted by expectations of a deal involving its cement subsidiary. Vale (VALE3) rose 0.58%, tracking the rise in iron ore prices internationally. On the other hand, Magazine Luiza (MGLU3) led the decliners, falling 3.95%.
International Markets and the Close
Wall Street fell in the session, pressured by higher oil prices, geopolitical tensions and the steepening of the US yield curve. Perri noted that, despite the negative impact abroad, the Brazilian market managed to distance itself from these pressures thanks to local factors.
In the United States, the manufacturing PMI and the job openings report (JOLTS) also drew attention. Job openings stood at 7.3 million in July, slightly below the expected 7.35 million, ahead of the official jobs report due next Friday.
In the previous session, on Monday (the 31st), the Ibovespa had closed at 177,418.78 points, up 1.00%.
