The Ibovespa slipped below 169,500 on Wednesday amid escalating tensions in the Middle East. Oil prices rebounded after renewed retaliatory attacks between the US and Iran, while expectations for an agreement that could restore crude shipments through the Strait of Hormuz diminished. The rise in oil prices drove bond yields higher on mounting concerns about energy-driven inflation and bolstered expectations of a more hawkish stance from the BCB. Current market pricing points to a pause in the central bank’s easing cycle at next week’s meeting, with investors increasingly positioning for the next move in interest rates to be an increase. Banks retreated, with Itaú and Bradesco down around 1%, and utilities also weakened, with Axia losing more than 1%. Vale slipped nearly 1% despite firmer iron ore prices. WEG extended its decline, falling more than 1% after posting weaker-than-expected earnings on Tuesday. Meanwhile, election polls indicated President Lula further widening his lead over Senator Flávio Bolsonaro.