By Brazil Stock Guide – The Ibovespa (^BVSP) traded slightly lower on Monday in São Paulo, moving within a narrow range as US markets remained shut for the Labor Day holiday, reducing liquidity. The session followed a record August, when the index advanced 6.5% on strong corporate earnings and expectations of Federal Reserve rate cuts, Reuters reported.
By 12:30 p.m. local time, the benchmark slipped 0.16% to 141,190 points, after oscillating between 141,070 and 141,949 points. Trading volume reached 4.76 billion reais.
BB Investimentos noted that signals of rate cuts by the Federal Reserve could continue to support emerging markets. “The indication of rate cuts by the Fed reinforces the central role of monetary policy in pricing risk assets, benefiting especially the Brazilian stock market, which remains undervalued compared with other emerging economies,” the firm said in a note. BB projects the Ibovespa at 161,000 points within 12 months, with a base case of 153,000 by the end of 2025.
Analysts at BTG Pactual (BPAC11.SA) also pointed to a more benign inflation outlook in Brazil, which could bring forward the start of monetary easing. “We believe that prospects for an earlier beginning of the easing cycle may attract investor attention, especially from foreigners. Monetary easing cycles are usually followed by higher equity prices,” they wrote. BTG now expects the Fed to begin cutting rates in September, with three 25-basis-point reductions this year.
Stock highlights
- Itaú Unibanco Holding SA (ITUB4.SA) rose 1.34% ahead of its investor event scheduled for Tuesday. BTG analysts expect more details on the bank’s efficiency plan through 2028.
- Vale SA (VALE3.SA) slipped 1.19% after iron ore futures in Dalian fell 2.67% to 766 yuan ($107.09) a ton.
- Raízen SA (RAIZ4.SA) jumped 5.13% after announcing the sale of two mills for 1.54 billion reais, part of its deleveraging strategy alongside partner Shell. Cosan SA (CSAN3.SA) advanced 4.27%.
- Petrobras PN (PETR4.SA) edged up 0.19%, tracking higher crude prices abroad, with Brent trading up 1.11% at $68.23 a barrel.
- Pão de Açúcar (PCAR3.SA) dropped 1.99% after a sharp 6.9% loss on Friday, amid reports of Mercado Libre’s expansion into pharmaceuticals.
- Fleury SA (FLRY3.SA) gained 3.49% after BTG called the stock attractive and flagged renewed potential for a deal with Rede D’Or (RDOR3.SA).
- Eletrobras (ELET3.SA) slid 4.14%, adjusting after a 13.48% rally in August.
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