São Paulo stock exchange loses 0.21% amid Middle East tension escalation

The São Paulo stock exchange experienced a slight downturn on Monday, with the benchmark Ibovespa index closing down 0.21% at 168,668 points. This dip occurred amidst heightened geopolitical tensions between Israel and Iran, which are casting a shadow over global economic stability.

The Brazilian market, which had already seen a cumulative decline of nearly 3% the previous week, continues to be affected by the volatile international scenario. These global turbulences, although somewhat moderated by the end of the trading day, also impacted the currency market. The Brazilian real depreciated by 0.45% against the U.S. dollar, with the exchange rate settling at 5.179 reals for buying and selling in the commercial market.

Following a week dominated by market concerns over potential interest rate hikes in major economies, the current week begins with increased apprehension due to the exchange of attacks between Israel and Iran over the weekend. While Tehran announced an end to its military operations against Israel, and Israel stated its fire was contained, the situation remains tense. Iran's missile launches into Israeli territory were in retaliation for attacks in southern Lebanon by Israel, which also targeted Iranian sites despite U.S. requests to refrain.

Compounding these concerns is the ongoing closure of the Strait of Hormuz, a critical chokepoint for global oil trade, which has led to a widespread increase in fuel prices. In this context, technology firm Positivo saw the largest losses on the Ibovespa, falling 7.4%, followed by construction company MRV (-4.6%) and energy company Cosan (-4.5%). Conversely, sugar and energy producer Raízen led the gains, with its shares rising 10%. State-controlled oil giant Petrobras also saw its stock appreciate by nearly 1%, buoyed by rising international oil prices. The total financial volume traded on the exchange reached 21 billion reais (approximately $4.04 billion USD) across roughly 3.5 million transactions.