Ibovespa Enters Runoff Week After 2.63% Gain | Morning Call, Oct 5

Ibovespa — Source: RT close, 2026-10-02. Figures rendered directly from the feed.

01 The setup in one read

Brazil’s market opens Monday with the first-round presidential result behind it and a runoff set for 25 October between Flávio Bolsonaro, who led with about 47% of valid votes, and Lula, at about 45%. The overnight reaction in the US-listed EWZ Brazil ETF — up around 10%, according to Exame — signals foreign investors are pricing in a more market-friendly contest.

That political shift now faces the economic data on today’s calendar. The BCB Focus survey at 8:30 BRT and the S&P Global PMIs at 10:00 BRT will test whether the rally can survive evidence of slowing activity.

The Selic is 13.75%, and the gap of about ten percentage points over US rates means Brazil’s carry trade remains one of the strongest in emerging markets. Traders will be watching the real closely for any sign the central bank may need to hold rates, or hike, rather than cut.

02 Where Brazil is set to open

The table shows the Ibovespa entering Monday after a strong Friday close and seen opening higher on the election result, though traders may be quick to bank gains after a 2.63% rise. The real, tracked through the PTAX — Brazil’s official daily settlement rate for the currency — is holding near 5.22 per dollar.

If the real breaks below 5.22, that would signal confidence in the carry trade; a push back above it may mean foreign investors are hedging the runoff risk. The Focus report and PMIs are the morning’s two catalysts most likely to move both instruments.

03 On the B3 radar today — Brazil’s data and the runoff backdrop

Today’s Brazilian data is light but meaningful. The BCB Focus readout is the morning’s first real test because it shows where economists expect the Selic, growth and inflation to settle.

The PMI releases at 10:00 BRT matter because services drive most of Brazil’s output and jobs. A composite reading below 50, with the estimate at 48.5, would reinforce the case for the central bank to hold the Selic at 13.75% rather than cut.

04 Copom and the macro backdrop

The Copom — Brazil’s monetary policy committee — cut the Selic by 0.25 percentage points to 13.75% on 16 September, its fifth straight cut. Its next meeting is on 3 and 4 November. The conversation this morning is whether the data give the committee room to keep cutting or to pause.

The US Federal Reserve’s target range of 3.75%–4.00% means Brazil offers a carry of roughly ten percentage points. That spread is the main reason carry trades into the real remain attractive.

If the Focus report shows inflation expectations drifting higher, the market may begin pricing an eventual Selic increase. If expectations stay anchored and the PMIs weaken, the trade flips to bets that cuts may come later than previously thought.
On Friday, US employers added 29,000 jobs in September (Non Farm Payrolls) against a forecast of 90,000 and a previous 133,000. The Unemployment Rate rose to 4.2% from 4.1%, with the U-6 Unemployment Rate at 7.6% (forecast 7.7%). Private payrolls (Nonfarm Payrolls Private) rose 46,000 against 85,000 expected, Manufacturing Payrolls added 9,000 (forecast 10,000) and Government Payrolls fell 17,000 (forecast +15,000). Weaker US hiring tends to ease pressure on the dollar, which helps the real.

At home, Brazil’s Industrial Production fell 1.2% in August from a year earlier, against a forecast of 0.3%, after a 0.5% fall previously (IBGE). The IPC-Fipe Inflation index for São Paulo rose 0.51% in September against 0.3% expected and 0.01% in August.

At 11:00 BRT today the US ISM Services PMI is due, with a forecast of 55.7 after 55.4. Within it, ISM Services Business Activity is expected at 61.5 (previous 61.7), ISM Services New Orders at 60.3 (previous 60.9), ISM Services Employment at 48 (previous 47.8) and ISM Services Prices at 72.9 (previous 72.6).

05 Corporate stories to watch today

No earnings or ex-dividend events are listed on B3’s calendar for today, so the corporate focus shifts to the election-sensitive names.

Turnover leaders on Friday included Petrobras preference shares (R$2.9 billion, or about US$0.56 billion) and Vale (R$2.3 billion, or about US$0.45 billion), suggesting large-cap and oil exposure remain the market’s preferred way to express election views. Conversions use Friday’s USD/BRL close of 5.2133.

The absence of fresh corporate numbers puts the FX and rate channels in charge of today’s tape. Any dollar weakening against the real would mechanically benefit exporters like Vale and Petrobras, while a stronger dollar would lift domestic revenue names tied to consumer spending.

06 The levels to watch at the open

Friday’s close of 192,115 frames the morning, with the 52-week closing high of 198,657 about 3.3% above it. A hold near Friday’s level would keep the election rally intact; a slide would open the door to profit-taking after Friday’s 2.63% gain.

In the currency, the real’s level near 5.22 per dollar is the pivot. A break below it would show real-money demand for the carry trade, while a move back above 5.22 could reflect runoff hedging before the 25 October vote.

07 What to watch

• BCB Focus report: Economists’ Selic and inflation forecasts at 8:30 BRT will set the rates direction for the open.
• S&P Global PMIs: The 10:00 BRT releases will reveal whether Brazil’s services and composite activity are contracting at the worst time for the real.
• EWZ overnight signal: The 10% rise in the US-listed Brazil ETF could attract early buyers but also invite profit-taking after Friday’s 2.63% gain.
• Friday’s leaders: Petrobras and Vale led turnover, so oil and iron-ore prices will steer the large-cap open.

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Frequently Asked Questions

What is the Selic today?

The Selic, Brazil’s benchmark interest rate set by the Copom, sits at 13.75%, far above the US Federal Reserve’s 3.75%–4.00% target.

What is the Ibovespa?

The Ibovespa is Brazil’s main stock index. It tracks the most liquid shares on B3, the São Paulo exchange.

When is Brazil’s runoff election?

The second round of the presidential election is scheduled for 25 October, after Flávio Bolsonaro led first-round voting on Sunday.

What is the BCB Focus report?

It is a weekly survey of economists’ forecasts for inflation, growth and the Selic rate, published by Brazil’s central bank.

Market data: RT

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief

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