FX.co ★ Ibovespa Drops on Oil Rally and Political Risks

The Ibovespa fell about 1% on Monday, slipping below 185,500 points amid a renewed surge in oil prices and ongoing political uncertainty. Oil climbed after Saudi Arabia shut down a key pipeline that bypasses the Strait of Hormuz. The prospect of fresh energy-driven inflationary pressures ahead of upcoming interest-rate decisions by both the BCB and the Fed weighed on credit-sensitive stocks.

Financials were broadly weaker: Banco do Brasil dropped more than 1%, while Itaú, Bradesco, B3, and Caixa each lost around 2%. Utilities also retreated, with Axia down 2% and Sabesp falling 2.5%.

Political risk remained elevated amid the continuing crisis involving the Supreme Court. A new Datafolha poll showed President Lula maintaining a numerical lead over Senator Flávio Bolsonaro in a potential October runoff.

In the commodities sector, Vale declined nearly 2% as iron ore prices in China closed lower. Petrobras, up 1%, was the sole notable gainer on the day.