FX.co ★ Ibovespa Falls Back from Record Heights

The Ibovespa index experienced a decline of approximately 0.5%, dipping below the 139,500 level on Wednesday. This decline marked a pullback from previous record highs as investors exercised caution in light of economic uncertainties related to US fiscal and trade policies. Concerns arose due to the ongoing deadlock over President Trump's tax reform efforts and slow-moving trade negotiations, which negatively impacted companies reliant on exports. Additionally, Moody’s recent downgrade of US sovereign debt to Aa1 on May 16 contributed to the elevation of Treasury yields. Domestically, discussions between Finance Minister Haddad and Central Bank President Galípolo, along with an impending address on monetary policy, raised apprehensions that government fiscal stimulus might reduce access to private credit. In the agribusiness sector, shares declined after potential avian flu cases in key poultry-producing regions posed threats to export activities. Major financial institutions, including Itaú Unibanco and Bradesco, opened with declines ranging from 0.5% to 1.0%, as rising future interest rates pressured their net interest margins. Concurrently, steel manufacturers saw losses due to indications of reduced demand from China, though energy companies witnessed gains driven by concerns over supply risks in the Middle East.