FX.co ★ Ibovespa Slips as Fiscal Worries and Hawkish Outlook Weigh

On Thursday, the Ibovespa index declined by 0.4% to 132,008, marking a reversal from its peak since October and concluding a six-day streak of gains. Investors are navigating increased fiscal worries and the central bank’s firm monetary policy stance. Recently, the central bank raised interest rates for the third time consecutively, this time by 1 percentage point. As a result, market expectations suggest further hikes, potentially elevating the terminal rate to 15.25%, which could lead to decreased investment and higher borrowing costs. Concurrently, the proposed income tax exemption bill aims to elevate the tax-free threshold to R$5,000, raising concerns about fiscal instability. To counterbalance, potential measures could include a 10% tax on overseas profits and dividend remittances. In market movements, Embraer experienced a significant decline of 6.8%, while JBS saw a gain of 4.2%, driven by positive sentiment concerning its anticipated dual listing in the U.S.