Ibovespa Hits 128,000 Points Amid Petrobras Surge and Lula’s Approval Decline

The Ibovespa, Brazil’s main stock index, soared nearly 3% on December 14, 2023, closing at 128,218.59 points, its highest level this year. This sharp rise followed a Datafolha poll showing President Lula’s approval rating at its lowest across all his terms.

The index gained 2.89% for the week, driven by strong performances from blue-chip stocks like Petrobras (PETR4) and cyclical sectors. Petrobras shares climbed over 3%, buoyed by JP Morgan’s revised price target for its ADRs from $17 to $18 and a reiterated “buy” recommendation.

The state-controlled oil company extended its gains after the Datafolha poll results, leading trading activity on the B3 stock exchange. Meanwhile, Caixa Seguridade (CXSE3) started the day as a top gainer after releasing solid fourth-quarter results.

However, it lost momentum and closed in negative territory. XP Investimentos analysts highlighted the company’s positive trajectory and diminishing non-recurring impacts in their assessment.

Cyclical stocks also led gains as interest rate curves flattened. Automob (AMOB3), Hapvida (HAPV3), and Localiza (RENT3) were among the session’s top performers. Conversely, Suzano (SUZB3) faced pressure from the strengthening Brazilian real against the U.S. dollar, ending as one of the day’s biggest losers.

Ibovespa Hits 128,000 Points Amid Petrobras Surge and Lula’s Approval Decline

The foreign exchange market mirrored the stock market’s optimism. The U.S. dollar fell 1.29% to R$5.5962, its lowest level since November 7, marking a weekly decline of 1.68%.

Globally, U.S. markets reacted to mixed economic data and geopolitical developments. Retail sales in the U.S. dropped 0.9% last month after a revised 0.7% gain in December, according to the Commerce Department.

Economists had expected a smaller decline of 0.1%. Despite this, Federal Reserve rate cut expectations remained unchanged, with September seen as the likely timeline for any adjustment.

In New York trading, the Dow Jones fell 0.37% to 44,546 points, while the S&P 500 dipped 0.01% to 6,114 points. The Nasdaq bucked the trend with a 0.41% rise to close at 20,026 points. For the week, the Nasdaq gained 2.5%, outperforming both the S&P 500 (+1.6%) and Dow Jones (+0.7%).

This week’s rally underscores investor confidence in Brazil’s equity market amid shifting political dynamics and favorable corporate developments.

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