Ibovespa tests 173k as easing rate outlook lifts equities

Brazilian equities rallied on Thursday as a combination of a cooling domestic inflation outlook and reassuring communication from the Central Bank relieved pressure on local interest rate curves. The benchmark Ibovespa index closed up 1.22% at 172,742.12 points, testing the key 173,000 psychological resistance level. Concurrently, the US Dollar fell 0.48% to close at R$ 5.1238, marking its lowest closing level in three weeks.

Market sentiment improved significantly after Central Bank Director Gabriel Galípolo clarified that monetary policy remains strictly committed to bringing inflation back to target. The clear communication helped ease curve premiums across domestic interest rate futures, which had been pressured by fiscal and global uncertainties. This reassurance, coupled with a more benign IPCA-15 consumer price index reading, bolstered investor confidence in local assets.

The positive momentum swept through major index heavyweights. Financials led the charge, with Itaú Unibanco (ITUB4) climbing 1.67% to R$ 42.59. Mining giant Vale (VALE3) also supported the index, rising 0.62% to R$ 73.15. Conversely, state-run oil firm Petrobras (PETR4) bucked the broader market's upward trend, dropping 1.11% to R$ 39.21 as international crude prices retreated.