On Wednesday, the Ibovespa index witnessed a significant surge, reaching its highest closing level since June 24, 2021.
The Brazilian stock market index rose 2.37% to 129,398 points, reflecting a strong market reaction.
The uptrend mirrored American stock indices, rising after the Federal Reserve maintained stable interest rates and hinted at potential 2024 cuts.
The U.S. Federal Reserve’s decision impacted global financial markets, including a notable decrease in the U.S. dollar against the Brazilian real, dropping 0.93% to R$ 4.91.
Subsequently, Brazil’s Central Bank’s Monetary Policy Committee (Copom) announced a cut in the Selic rate by 0.50 points to 11.75% annually in their Wednesday meeting.
The market had widely anticipated this reduction, as previously indicated by the Committee in their October meeting.
In Brazil, the cut in the Selic rate, which started in August 2023, has been a strategic move by the Central Bank following a year at a 13.75% level.
Brazil’s Central Bank emphasized maintaining future cut rates and urged prudent monetary policy management in its post-decision statement.
The U.S. Treasury yields and Brazil’s DI futures contracts also responded to the prospects of lower rates in the U.S., with significant drops noted.
The yields on U.S. Treasuries fell by 0.18 points to 4.02%, while Brazil’s DI rates decreased across all maturities, such as a 0.20 point drop for April 2025, landing at 9.91%.
Investor sentiment in the U.S. shifted to a more optimistic outlook
Stocks sensitive to interest rate cuts, such as Magazine Luiza, Hapvida, and MRV, led the day’s gains.
Companies like Gol, Azul, and CVC also saw notable rises, boosted by the dollar’s decline.
The partial recovery in oil prices on Wednesday further aided the stock market.
Shares in Petrobras (PETR3; PETR4) increased by 1.44%, while PRIO and PetroRecôncavo also experienced significant gains. Vale’s (VALE3) shares remained nearly stable.
In the U.S., the market reacted positively to the Federal Reserve’s indications. The Dow Jones rose 1.40%, closing above 37,000 for the first time.
The S&P 500 and Nasdaq also saw gains of 1.37% and 1.38%, respectively, with widespread increases across most companies within these indices.
Investor sentiment in the U.S. shifted to a more optimistic outlook, as indicated by the Instant Markets Live Pulse survey conducted after the Fed’s decision.
However, this optimism was tempered by some investors’ cautionary stance regarding the market’s aggressive expectations for rate cuts.