São Paulo stock market drops 1.23% on cautious Central Bank signals

Brazil's main stock market, the São Paulo Stock Exchange, experienced a 1.23% decline on Thursday, closing at 175,546 points. This downturn follows cautious signals from the Central Bank of Brazil regarding future interest rate reductions.

The Central Bank had previously lowered its benchmark interest rate by 0.25 percentage points for the fourth consecutive time, bringing it to 14% annually. While this move offers some relief in credit costs, the bank's accompanying statement was interpreted by market operators as more conservative than anticipated, casting doubt on further short-term rate cuts.

This uncertainty surrounding monetary policy led traders on the São Paulo exchange to adopt a prudent approach. The market was also influenced by the possibility that the US Federal Reserve might increase its interest rates before the end of the year. Adding to global economic concerns, international oil prices saw a significant rise due to tensions in the Middle East, fueling worries about increased energy costs and subsequent global inflationary pressures.

Among the most affected stocks on the Ibovespa index were preferred shares of Bradesco bank, which dropped 1.8% after reporting an increase in non-performing loans in its quarterly balance. The largest losses were seen in the shares of gym chain Smart Fit, which fell 7.82%, and truck rental company Vamos, down 6.33%.

Conversely, preferred shares of petrochemical company Braskem and construction firm Cyrela saw gains of 3.07% and 2.88%, respectively, leading the day's advances. In the foreign exchange market, the Brazilian real appreciated by 0.41% against the US dollar, which closed at 5.106 reals for buying and 5.107 reals for selling.