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Thadeu Dos Santos, Regional Director at Infinox
“Brazil’s Ibovespa could see cautious trading on Thursday amid geopolitical concerns, following a strong rally in the previous session that pushed the index to a high. The earlier surge was driven by a sharp decline in oil prices after a ceasefire agreement between the United States and Iran, which eased global inflation concerns and reinforced expectations of a more accommodative monetary policy backdrop. However, the index could be exposed to some volatility as fragile geopolitical conditions could potentially trigger profit-taking following the recent rally. Lingering uncertainty in the Middle East continues to weigh on risk appetite, prompting a more cautious stance among investors. While oil prices declined significantly during yesterday’s session, they remain relatively elevated, which could help support Brazil’s trade balance and provide a tailwind to energy-heavy names. However, a return to energy price increases could lift domestic inflation expectations, complicating the monetary policy outlook and limiting upside for equities. Looking ahead, Ibovespa’s direction will likely remain closely tied to developments in oil markets, the durability of the current geopolitical truce in the Middle East, and global risk appetite.”
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