FX.co ★ Ibovespa Tumbles Amid Hawkish BCB

The Ibovespa index experienced a 1.2% decline, closing at 137,116 on Friday, marking its most significant daily drop in several weeks. This downturn came as investors returned from a holiday break to digest the central bank's unexpected increase in the Selic rate to 15%. The move further escalated borrowing costs and cast doubt over the prospects for sectors sensitive to credit changes. The banking and consumer finance sectors were particularly affected. Stocks such as Santander, Bradesco, Itaúsa, and Banco do Brasil saw declines of 2.2%, 1.7%, 1.1%, and 1.9% respectively, following the Central Bank's Monetary Policy Committee's (Copom) indication of prolonged tightening if inflation stays high. Retail and real estate stocks were also impacted, as projections suggested that elevated rates would suppress consumer spending and hinder new construction. Additionally, a modest dividend payout from Petrobras failed to boost energy stocks, resulting in the São Paulo exchange ending the week 0.1% lower.