Ibovespa Slides as Fiscal Uncertainty and Petrobras Downgrade Weigh on Brazilian Markets

Brazil’s Ibovespa index closed Tuesday at 135,699.38, down 0.30% after a volatile session defined by domestic fiscal concerns and a sharp drop in Petrobras shares.

Official B3 data and TradingView charts show the index extended its losing streak to a fourth session, reflecting investor caution as the government prepared a new compensation package for the IOF tax rollback.

The day’s narrative centered on the government’s recalibration of the IOF tax increase. Finance Minister Fernando Haddad announced that, to offset the partial IOF rollback, authorities would introduce new taxes on previously exempt securities.

They also plan to raise levies on online betting and financial institutions. Investors monitored these developments closely, expecting the provisional measure’s release within hours.

This uncertainty pressured the market, especially as the new tax structure could affect banks and financial services. Petrobras shares (PETR3, PETR4) fell nearly 2% after Santander and Bank of America downgraded the stock from “buy” to “neutral.”

The downgrades cited sector and political risks, and as Petrobras makes up over 10% of the Ibovespa, its decline dragged the index lower.

The banking sector also struggled, with most major banks ending in the red due to concerns about possible changes to the CSLL and JCP, which could impact profitability. Banco do Brasil stood out with a modest rebound after a long losing streak.

Technical Indicators Signal Caution Amid Fiscal and Global Uncertainty

Technical analysis of the daily and 4-hour charts reveals a market at a crossroads. The Ibovespa trades just above the 200-day moving average, which acts as key support near 134,124.

The 50-day moving average at 137,689.62 now serves as resistance. Bollinger Bands have narrowed, indicating reduced volatility and a lack of strong directional conviction. The Ichimoku cloud envelopes the price, a classic sign of indecision.

The MACD shows a slight bearish crossover, while the Relative Strength Index remains neutral, hovering around 45. Volume remains moderate, offering no confirmation for a breakout.

Globally, Wall Street posted mild gains, with the S&P 500 up 0.09% and the Nasdaq up 0.31%. However, these moves failed to lift Brazilian equities, as local factors dominated sentiment.

Commodity prices provided limited support, with oil rising 1.24%, but this could not counteract the drag from Petrobras and fiscal uncertainties. Fundamentals remain mixed.

Brazil’s first quarter GDP grew 1.4% from the previous quarter, supported by strong agricultural output and household consumption. However, inflation expectations remain above target, and the central bank is expected to keep the Selic rate steady at 14.75%.

The market’s inability to break higher or lower underscores widespread caution as investors await clarity on fiscal measures and global trade developments.

The Ibovespa’s current position—sandwiched between key moving averages and trapped in the Ichimoku cloud—shows a market searching for direction. Investors remain alert, watching both Brasília and global cues to determine the next move.