Ibovespa Drops Below 130,000 Points Under Wall Street’s Influence

The Brazilian stock market, represented by the Ibovespa index, has been under significant pressure from Wall Street. This pressure has kept the index below 130,000 points for the second consecutive session.

Meanwhile, IRB Re (IRBR3) shares surged by 12%, reflecting a notable exception to the general downturn. On Wednesday, October 23, the Ibovespa fell by 0.55%, closing at 129,233.11 points.

The decline was influenced by Wall Street’s negative tone and a drop of over 1% in commodity prices. Concurrently, the US dollar closed at R$ 5.6928 (-0.08%), equivalent to approximately $1.02.

Domestically, the market reacted to recent comments from Brazil’s Finance Minister, Fernando Haddad. He emphasized strengthening the fiscal framework as a crucial measure for Brazil’s current economic situation.

Haddad plans to discuss related initiatives with President Luiz Inácio Lula da Silva. Speaking in Washington during a G20 ministers’ meeting, Haddad addressed concerns about Brazil’s fiscal management.

He described claims that the government is neglecting public finances as “a bit exaggerated.” Following several revenue-raising measures, the economic team faces pressure to implement spending controls.

They have promised to present expenditure management projects after the second round of municipal elections.

As trading neared its end, investors also focused on Central Bank President Roberto Campos Neto’s participation in a UBS BB event in Washington.

Ibovespa’s Gains and Losses

Among Ibovespa-listed assets, IRB Re (IRBR3) stood out with a more than 13% increase during the session. This surge followed the company’s positive operational results for August.

The reinsurer reported a net profit of R$ 29 million ($5.18 million) for August, following a R$ 33.6 million ($6 million) profit in July.

Citi analysts noted that IRB Re’s financial results remained robust and projected a quarterly net profit of around R$ 95 million ($17 million).

Carrefour (CRFB3) shares also drew attention after announcing third-quarter previews and plans to sell 65 stores under the Nacional and Bompreço brands.

These sales are expected to generate approximately R$ 1.5 billion ($268 million), accounting for about 1% of Carrefour Group’s total sales.

According to Safra Bank, Carrefour’s sales performance met expectations and should not significantly impact third-quarter margins.

BTG Pactual anticipates gradual improvement in trends over upcoming quarters due to Carrefour’s efforts to optimize its store portfolio and recent food inflation recovery.

Itaú BBA estimates that selling these stores could yield between R$ 500 million ($89 million) and R$ 1 billion ($179 million).

This would reduce leverage by up to 0.2x with minimal impact on EBITDA (earnings before interest, taxes, depreciation, and amortization).

On the downside, Hypera (HYPE3) saw recent gains reversed and ranked among Ibovespa’s largest decliners. Earlier this week, the pharmaceutical company confirmed that it received a public acquisition offer.

This offer also included a business combination proposal from NC Farma, EMS’s parent company. Among major players in Brazil’s stock market index, Vale (VALE3) and Petrobras (PETR4; PETR3) continued their negative trend due to declines in iron ore and oil prices.

International Influence

In the United States, Wall Street extended its previous day’s decline as U.S. Treasury yields rose sharply. The ten-year Treasury yield surpassed 4.25%, reaching its highest level since July 26.

Treasury yields have climbed recently amid increasing bets on Donald Trump’s victory in the upcoming U.S. presidential election. During trading hours, the CBOE Volatility Index (VIX), known as Wall Street’s “fear gauge,” increased by over 10%.

Investors also monitored the Federal Reserve’s Beige Book release, which indicated stable U.S. economic activity from September through early October alongside rising hiring rates.

The coming weeks are likely to be volatile for stock markets as investors assess corporate earnings reports, new economic data, and the U.S. election results ahead of the Federal Reserve meeting in early November.

New York Indices Closing Figures:

• S&P 500: Down by 0.92%, closing at 5,797.42 points
• Dow Jones: Down by 0.96%, closing at 42,514.95 points
• Nasdaq: Down by 1.60%, closing at 18,276.65 points.

Related coverage: Brazil's Currency Flow: A Positive October Amid Financial Outflows · IMF Predicts Significant Increase in Brazil's Public Debt-to-GDP Ratio · Global Steel Production Declines, But Brazil's Output Rises · Norway's Central Bank Acquires 5.09% Stake in Brazilian Energy Giant Raizen

More: Brazil news in English, every day from The Rio Times.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error