Ibovespa Breaks Into The 171,000s As Foreign Money Chases Brazil

Key Points

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• Global risk mood improved, and Brazil drew demand.

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• Turnover hit R$43.32 billion ($8,022,000,000), far above average.

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• Charts confirm a breakout, but momentum now looks stretched.

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\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nThe rally that began with a record close on Tuesday turned into a breakout on Wednesday. The Ibovespa jumped 3.33% to 171,816.67 after touching 171,969.01. The session low was 166,277.91, set at the open. Tuesday’s close had been 166,276.80.\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nThe trigger was global. U.S. stocks recovered after President Donald Trump softened tariff threats tied to Greenland. He said a framework was “at hand.” He also said Feb 1 tariffs would not be imposed. Wall Street gained more than 1% on the day.\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nBrazil’s currency strengthened as well. The dollar fell to about 5.3209 reais per $1, down roughly 1.11% on the session. Lower U.S. Treasury yields helped.\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n

\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nOne market comment said the drop “eased pressure” for dollar buying in Brazil. Another pointed to equity inflows increasing dollar supply.\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n

Foreign inflows fuel Brazil breakout

\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nMarket commentary framed the move as rotation out of developed markets and into Brazil. A Reuters-cited adviser warned there is “great dependence” on foreign flow.\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nB3 figures cited in market coverage put net foreign inflows near R$7.6 billion ($1,407,000,000) through Jan 19. Some also cited hopes for rate cuts.\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nTurnover also underlined the rush. It exceeded the year’s average near R$28.99 billion ($5,369,000,000). The gain was broad, but leadership was clear. Education and consumer cyclicals led.\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nCogna rose 10.96% after BTG Pactual upgraded the stock and lifted its price target. Yduqs added 8.91%, with analysts arguing the sector is entering a “cash cow” phase. C&A climbed 7.93%, Vamos rose 7.49%, and Lojas Renner gained 6.39%.\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nThere were not five true decliners. TIM was the only stock to finish down, falling 1.11% after Citi cut its rating to neutral. Citi also lowered its target price.\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nThe weakest large names still rose. Vale gained 3.02%, Santander unit rose 3.02%, Bradesco added 3.08%, and Petrobras preferred rose 3.53%.\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\n\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nThe charts confirm the breakout and flag overheating. The 4-hour RSI is 83.60. The daily RSI is 75.25. The weekly RSI is 77.89. MACD stays positive across timeframes. That supports the trend, but it raises the cost of bad headlines.\\\\\\\\\\\\\\\\n

For broader market context, see Brazil’s Morning Call for this date. This is part of The Rio Times’ daily coverage of the Brazilian stock market and Latin American financial markets. This is part of The Rio Times’ daily coverage of the Brazilian real exchange rate and Latin American financial markets.

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For the latest currency context, see our USD/BRL exchange rate analysis for this date.

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For the latest currency context, see our USD/BRL exchange rate analysis for this date.

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For the latest currency context, see our USD/BRL exchange rate analysis for this date.

For the latest currency context, see our USD/BRL exchange rate analysis for this date.

For the macro context, see Brazil’s Morning Call for the same date.