FX.co ★ Ibovespa Drops for 2nd Straight Session

On Wednesday, the Ibovespa index experienced a decline of 0.5%, closing at 145,517. This downturn was influenced by weakened domestic economic activity and declining external demand, which lessened investor appetite for Brazilian stocks. Leading the declines were major banks, with Banco do Brasil dropping 0.9%, Santander falling 1.5%, Itausa decreasing by 1.6%, and Bradesco down by 2.1%. These losses followed an Itaú BBA report highlighting increasing agribusiness defaults in August. Petrobras shares also fell by 0.6% amidst a decrease in oil prices due to anticipated larger output increases from OPEC+ and reduced demand from the US and Asia. In contrast, Vale saw a 1.3% rise following news that China's centralized purchaser reduced orders from BHP, directing some of the mill's demand to other suppliers and bolstering iron ore transactions. Additionally, S&P Global reported that the manufacturing PMI dropped to 46.5 in September, marking the most significant contraction in 29 months, indicative of reduced new orders, output, and input procurement. Furthermore, the ongoing US government shutdown, which complicates the US economic data schedule and the broader global economic outlook, contributed to diminished investment flows into Brazilian risk assets.