FX.co ★ Brazilian Equities Weaken on Election Concerns

The Ibovespa index declined by over 0.5%, dropping below the 160,000 mark on Friday, primarily due to political uncertainties affecting market sentiment. This development came after former President Bolsonaro announced his son Flávio as a presidential candidate for the upcoming October elections—a decision perceived unfavorably by the financial markets, which lean towards a more moderate opposition contender. Major banks suffered declines, with Itaú decreasing by more than 0.4% and Bradesco by 0.8%. Meanwhile, Itaúsa slipped by 0.3% following an increase in its stake in Alpargatas to approximately 15.9% of the preferred shares, raising the collective stake of controlling shareholders to about 40%. This comes in the wake of a controversial Havaianas advertising campaign that had led to political pushback. In other sectors, Embraer saw a 0.6% decline after renegotiating its aircraft order with Azul, cutting down the firm orders for E195-E2 jets from 51 to 25 as part of the airline's restructuring under Chapter 11. Oi experienced a sharp fall of 5.9% following a court's decision to grant immediate effect to the bankruptcy ruling concerning its subsidiary, Serede. Additionally, declines in Petrobras and Vale stocks were noted, driven by the weakening prices of oil and iron ore.