Brazil’s Ibovespa stock index rose 3.5 percent to 185,988 points around midday on Wednesday, approaching 186,000 points. The rally followed a Quaest opinion poll showing President Luiz Inácio Lula da Silva and Senator Flávio Bolsonaro in a technical tie in a hypothetical runoff, with Lula at 42 percent and Bolsonaro at 41 percent, both within the poll’s 2-percentage-point margin of error.
Political poll narrows
The Quaest poll narrowed the gap between the two to 1 percentage point from a 3-percentage-point lead in the previous survey. In a first-round scenario, Lula had 37 percent, Flávio 29 percent, and Augusto Cury 10 percent. The Ibovespa was heading for its 11th consecutive session of gains. Gabriel Magno, head of investment allocation and partner at AW Capital, said foreign investors had stopped selling Brazilian stocks massively after heavy selling in the first half of August. “Just for that, the flow has already improved a lot and gave the stock market a boost,” he said.
The narrowing dispute between Lula and Flávio also raised market expectations around a possible change at the presidency and fiscal policy, Magno said, adding that measures could improve the trajectory of public debt. Jefferson Laatus, strategist and partner at Grupo Laatus, cautioned that the market was showing what it desired but that “when some frustration comes, the fall will be large.”
Currency and sentiment
The dollar declined to new lows near 5.10 Brazilian reais per dollar around midday, down from Tuesday’s close of 5.1533 reais per dollar. Vale and Itaú Unibanco were among the blue-chip stocks contributing most to the index rise, while Petrobras shares advanced despite falling oil prices. Rebecca Nossig, equity strategist at Nomad, said international investors continued seeking Brazilian companies with strong cash generation and dividend payment capacity, with the political scenario functioning as a volatility catalyst.
Source: Quaest
