FX.co ★ Ibovespa Retreats on Wednesday

The Ibovespa index declined by 0.4%, closing at 138,701 on Wednesday. This drop reflects investor worries over trade tensions and renewed concerns about fiscal stability. Within Brazil, the sudden imposition of the IOF tax on financial transactions has raised alarms about the sustainability of the country's revenue strategy, leading fund managers to adopt more cautious investment approaches. Internationally, President Trump's decision to increase tariffs on steel and aluminum to 50%, along with the approaching "Liberation Day" deadline for exemption proposals, poses a threat to Brazil's metal and industrial exports. This situation could potentially impact company earnings. Meanwhile, the OECD has revised its global growth forecasts downward, and a surprisingly weak ADP employment report in the US has triggered fears of reduced demand for commodities. Consequently, oil prices have dropped, resulting in a 2.6% decline in Petrobras shares. In addition, banks and retailers experienced declines as investors evaluated the potential for Central Bank interest rate cuts amidst mixed inflation data. Moreover, negative foreign exchange flows in May indicated possible capital outflows.