FX.co ★ Ibovespa Falls on Fiscal Concerns and Tax Hike Plans

The Ibovespa index declined by over 1.5%, settling near 135,000 on Friday amid ongoing fiscal and political challenges in Brasília. In a notable shift, the government reversed some alterations to the Tax on Financial Operations. They maintained a 0% rate on offshore fund investments and set a 1.1% rate on international remittances. This reversal followed the Finance Ministry's announcement of a budget freeze amounting to BRL 31.3 billion—exceeding expectations and deemed sufficient to achieve the BRL 31 billion primary deficit goal. Political tensions further escalated when US Secretary of State Marco Rubio suggested potential sanctions against Supreme Federal Court Minister Alexandre de Moraes. Meanwhile, trade figures indicated that Brazil and the US experienced a record $27.2 billion in bilateral trade this year, despite looming tariff threats. The global market backdrop added pressure as former President Trump proposed a 50% tariff on EU imports and a 25% duty on Apple products. The banking sector bore the brunt of the downturn with Itau, Bradesco, and Santander all losing more than 2%. Additionally, Raizen's stock fell by 1% as investors capitalized on a remarkable 17% surge earlier in the week.