Brazil’s Bovespa Extends Slide as Local Uncertainty Counters Global Gains

The Bovespa Index closed Friday at 136,102.10, down 0.10% for the day and 0.67% for the week, marking its third consecutive weekly decline.

This drop, the steepest three-week slide since April, leaves the index 2.86% below its record high of 140,109.63 set on May 20.

The index has now fallen seven out of the last eight trading days, reflecting persistent caution among investors.

Trading volumes held steady, with over 606 million shares changing hands. The Brazilian real strengthened, with the US dollar ending at R$5.57, its lowest level since October.

Investors responded to ongoing debates about the IOF financial transaction tax and speculation about a possible increase in the Selic rate, which currently stands at 14.75%.

These local uncertainties weighed on sentiment, even as global markets posted gains.

Globally, equity markets showed resilience. The S&P 500 climbed 1% to 6,000.36, the Dow Jones added 1.05%, and the Nasdaq rose 1.2%.

European stocks also advanced for a second straight week, buoyed by strong US jobs data and signs of easing trade tensions.

Brazil’s Bovespa Extends Slide as Local Uncertainty Counters Global Gains

The MSCI All-Country World Index reached a new high, underscoring the positive global backdrop.

Despite this, Brazil’s market diverged. The top gainers on the Bovespa included Grupo Vamos, up 4.63%, Azzas 2154 ON, up 3.71%, and YDUQS Participacoes, up 3.26%.

Cogna Educacao and Telebras also posted solid gains. On the downside, Automob ON dropped 6.86%, Azul SA Pref lost 6.25%, Braskem fell 5.90%, Gerdau MET PN slipped 4.35%, and Klabin S/A UNT N2 declined 4.29%.

These moves reflected sector-specific pressures, with cyclicals and exporters underperforming as investors reassessed interest rate risks and domestic policy uncertainty.

Technical analysis shows the index remains in a short-term retracement. On the four-hour chart, the Bovespa sits below its 9, 20, and 50-period moving averages and within the Ichimoku cloud, but above the 200-period average.

This pattern signals near-term volatility and suggests further downside is likely, with key support at 134,000 and 130,000.

The daily chart paints a healthier long-term picture, with the index well above its 50- and 200-day moving averages and the Ichimoku cloud, indicating the broader uptrend remains intact.

Relative Strength Index readings suggest the market is neither overbought nor oversold, while MACD momentum has turned negative in the short term.

Bollinger Bands show price hugging the lower band, underlining the current pressure.

Volume analysis confirms that recent declines have come with steady trading activity, lending credibility to the move.

Compared to emerging market peers, Brazil’s Bovespa has gained 14.8% from its 52-week low but now lags Chile’s IPSA, which leads with an 11.2% year-to-date gain.

While global markets ride a wave of optimism, Brazil’s bourse faces a test of confidence as local policy debates and rate expectations dominate the narrative.

The coming sessions will reveal whether support levels can hold or if the retracement deepens.