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IN THIS ISSUE

• Brazil’s main stock index reaches new highs, riding global markets' coattails

• Congress is not equipped to deal with the complexities of online gambling regulations

• The plan to improve Brazil’s internet cable infrastructure

Brazil’s stock index has never been higher

In a remarkable turnaround, Brazil’s Ibovespa stock index soared to an all-time high on Tuesday, propelled by a combination of cooling US inflation, signs of a pause in the Central Bank’s monetary tightening cycle, and the US-China trade détente.

By the numbers. The benchmark index climbed 1.74% to close at 138,963 points, its highest nominal level ever. Earlier in the day, it touched a new intraday record of 139,418. The rally marked a sharp reversal from Monday’s weak session and was mirrored in the foreign exchange market, where the dollar slid 1.32% to BRL 5.60 — its lowest level in seven months.

Global markets. The commodities market gave Brazilian stocks a boost on Tuesday. Iron ore rose more than 1% on China’s Dalian exchange, while oil prices ended the day on a high. As a major exporter of raw materials, Brazil stands to benefit from rising commodity prices — that is particularly the case for the stock market, where major oil and iron ore producers Petrobras and Vale weigh heavily on the Ibovespa index.

What’s happening. Global cues helped fuel optimism. The US consumer price index data released earlier in the day pointed to a softer-than-expected inflation result, bolstering hopes that the US Federal Reserve will not hike rates in the coming months. 

• Higher interests in the US tend to be bad for emerging markets and their riskier assets. As yields on Treasury bonds climb, capital typically flows out of developing economies into safer, more lucrative American debt.

Pause here, too. Investors also celebrated the tone of the minutes of the Central Bank’s latest policy meeting, which, for Bradesco Asset Management, hinted at a pause in the tightening cycle at the current 14.75% rate — where it is expected to remain for an extended period.

Caution and flexibility. “The global environment is adverse and particularly uncertain,” the Central Bank said. Policymakers warned of the “impacts of the tariffs shock and the uncertainty shock,” noting that uncertainty had become “much higher than expected.” Amid the global uncertainty, the bank refrained from signaling further hikes — adopting a wait-and-see approach.

Prices. Headline and core inflation in Brazil remain above target — with expectations for the year-end benchmark IPCA index sitting at 4.8% (outside of the 1.5%-4.5% target band). The Central Bank underscored that “the inflation outlook remains challenging in several dimensions.”

👉 Why it matters. Yet despite these headwinds, markets appear buoyed by the idea that the worst may be behind. The Brazilian real has gained 9.3% against the US dollar year-to-date, which is seen as a reflection of Brazil escaping the worst of Trump’s tariff war.

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