16.12.202521:46:48UTC+00Ibovespa Tumbles on Election Uncertainty

On Tuesday, the Ibovespa index experienced a significant decline, dropping 2.4% to close at 158,558. This downturn was primarily driven by investor reactions to new election polling data and the release of the Copom meeting minutes. The latest survey from Quaest indicated an expanding lead for President Lula, sparking renewed concerns over fiscal responsibility and the trajectory of medium-term public expenditures. This development has increased Brazil's risk premium and exerted considerable pressure on financial stocks and small-cap companies, both of which suffered the most from the selloff. Simultaneously, the minutes from the Copom meeting noted a quicker pace of disinflation but maintained a cautious approach to monetary policy, solidifying the expectation that the reduction in the Selic rate will commence later than previously anticipated. The financial sector led the decline, with notable losses recorded by Banco Do Brasil (-1.4%), Santander (-3.6%), Bradesco (-2.8%), Itaúsa (-3.3%), and B3 (-4.8%). In addition, Petrobras, a major company, was among the top decliners, losing 2.7% as oil prices fell.