The Ibovespa fell 1.2% on Thursday, closing at 175,546 points, after the Brazilian Central Bank (BCB) signaled a more cautious stance toward additional interest rate cuts. On Wednesday, the Copom reduced the Selic rate by 25 basis points, to 14.0%, but stopped short of indicating another cut for September, reiterating instead that future moves will depend on incoming economic data.
Bond yields rose following the committee’s statement, which stressed the need to preserve an adequate level of monetary restraint to ensure inflation converges to its target amid heightened global uncertainty.
Financial stocks weighed on the index: Itaú lost 1.3%, Banco do Brasil dropped 3.7%, and Bradesco declined 1.9% after reporting weaker credit quality indicators. Axia, which had traded higher earlier in the session, reversed gains to end down 1% despite announcing a recovery in net profit.
Major exporters also retreated after Brazil reported a trade surplus below market expectations. Vale fell 1.7%; Gerdau and CSN each lost 2.5%; Embraer slid 1.5%; and Minerva dropped 3%.
