São Paulo stock exchange drops 1.20% amid new U.S.-Iran tensions

Brazil's stock market opened the week on a downward trend, with the main Ibovespa index dropping 1.20% on Monday. The decline was primarily driven by escalating tensions in the Middle East and concerns surrounding the Strait of Hormuz.

The Ibovespa closed at 175,739 points, a notable shift from the previous Friday's rally, which saw a nearly 3% increase. In currency markets, the Brazilian real weakened by 0.45% against the U.S. dollar, which traded at 5.130 reais for buying and 5.131 for selling.

Global markets adopted a cautious stance following renewed confrontations between the United States and Iran. Adding to the uncertainty were reports of a potential 20% tariff proposed by Donald Trump on ships transiting the Strait of Hormuz. Market sentiment was also affected by comments from Federal Reserve Director Christopher Waller, who suggested the possibility of interest rate hikes if U.S. inflation remains higher than anticipated.

The surge in international crude oil prices positively impacted Petrobras, Brazil's state-controlled oil giant. Petrobras' ordinary shares rose by 3.44%, and its preferred shares gained 2.55%, making them the most traded stocks of the day. This performance helped cushion the overall market decline, which was also influenced by a 1.7% drop in shares of mining giant Vale.

Other notable gainers included Braskem, whose preferred petrochemical shares climbed 4.68%, and Companhia Siderúrgica Nacional, with its ordinary shares up 4.21%. Conversely, major losses were seen in the shares of department store chain Casas Bahia, which fell 6.31%, and energy company Auren, down 5.45%. The total trading volume for the day exceeded 19.588 billion reais (approximately $3.818 billion) across more than 3.04 million financial operations.