Ibovespa Plunges on US-Iran Conflict Fears Amid Rising Oil Prices

The Brazilian stock market, represented by the Ibovespa index, fell nearly 1% on Monday to trade below 170,000. This decline came amidst growing concerns about a potential US-Iran conflict and its impact on oil prices.

Oil prices are expected to rise further due to restrictions on Iranian oil flows, leading to increased inflationary pressures. The Focus Survey reported that the financial market's estimate for 2027 inflation rose to 4.25% from 4.24%, a slight increase.

The forecast for Brazil's GDP growth in 2026 also decreased, falling from 1.98% to 1.95%. Additionally, the estimated Selic rate at the end of 2026 remained steady at 13.75%, maintaining its previous value.

Financial stocks performed poorly, with Itaú, Bradesco, Itaúsa, and Banco do Brasil down about 1% each. Petrobras saw a significant decline of 4.5% as oil prices pulled back due to profit-taking ahead of the US sanctions announcement. Utilities also suffered losses, with Sabesp losing more than 1%.

A Datafolha poll showed that President Lula and Senator Flávio Bolsonaro are in a statistical tie in a potential runoff for the presidential election.