On Monday, the Ibovespa index fell by 1.3% to close at 139,490, losing ground after reaching a recent all-time high. This decline was spurred by President Trump's declaration over the weekend, which threatened comprehensive tariffs on "anti-American" BRICS nations and 25% duties on all imports from Japan and Korea starting August 1. This announcement rekindled fears of a global trade conflict that could adversely impact Brazil's major commodity corporations. As a result, Petrobras shares decreased by 0.5%, Vale dropped by 1.6%, and other mining companies followed suit.
On the domestic front, June's producer-price index experienced a significant decrease of 1.29%, marking its sharpest downturn in almost two years. Additionally, industrial production contracted for the second month in a row, underscoring the ongoing impact of Brazil's still-high Selic rate of 15% on the manufacturing sector. Investor sentiment was further dampened by the unresolved IOF-tax issue in Congress and the Supreme Court, along with a lack of new fiscal or infrastructure measures from President Lula’s administration, all of which exacerbated investor caution amid rising global risk aversion.
