FX.co ★ Ibovespa Closes Lower on Fiscal Concerns

The Ibovespa fell 0.7% on Tuesday, closing at 172,024 points, as investors reduced risk at the end of the first half and digested weaker fiscal and labor market data. Brazil’s gross public debt and primary deficit for May both came in above expectations, heightening fiscal concerns. Gross debt rose to 81.1% of GDP, surpassing market projections of 80.7%, while the primary deficit reached R$56.1 billion, compared with a forecast shortfall of R$53.5 billion. The worsening fiscal picture reinforced fears of higher funding costs and sustained pressure on interest rates.

Labor market data also disappointed: the economy generated about 73,000 formal jobs in May, well below the 115,000 positions expected. Losses on the Ibovespa were broad-based. In the banking sector, Banco do Brasil declined 1.7%, and Itaú slipped 0.5%. Utilities mostly traded lower, with Axia down 1.3%. Petrobras fell 0.9% as oil prices dropped to their lowest levels since 2020, while Braskem slid 4.3% after being downgraded by both JPMorgan and Citi.