Analysis: Perfect storm cools dream of 200 thousand points

Ibovespa ended its seventh consecutive week of decline and recorded the worst monthly performance since 2023. The correction movement was mainly driven by the departure of foreign investors from the Brazilian stock exchange, increasing pressure on the country's main stock market index.

For CNN Money analyst Lucinda Pinto, there is no single factor capable of explaining the scenario, but rather the combination of several elements that began to worry investors at the same time.

"We really have to look at the moment the market has turned sour. Things have gotten worse in one week in an impressive way," he said.

Among the main pressure factors, the analyst highlighted the perception that the space for further interest rate cuts was significantly reduced.

"There are people saying that there is no more room to cut interest rates, and when you look at the curve, there is even a modest pricing of some increase", he explained. Although no market agent openly advocates a rise in the Selic, the change in expectations has penalized the stock market.

The tax issue also remains on the radar. Lucinda cited an XP calculation that points to fiscal stimuli of around R$200 billion, part of which was carried out outside the budget. "This is additional pressure for the market", he assessed.

In this context, more indebted companies tend to suffer more, given the increase in financing costs and the need to renegotiate liabilities.

The exit of foreign investors also contributed to the weakening of the stock market. At the beginning of the year, Brazil was seen as an alternative for investors looking to diversify their positions in relation to US technology stocks. Furthermore, the country benefited from its status as an oil exporter and its distance from the main sources of geopolitical tension.

This scenario, however, has changed. "It seems that that artificial intelligence bubble discussion is over, and the foreign investor who was coming to Brazil looking for an alternative would theoretically return to this sector", said Lucinda.

The analyst also noted that the fiscal gain expected from the rise in oil prices did not materialize as projected by the market.

"Everything that we seem to gain from a fiscal point of view with the rise in oil prices is being spent. The government is using it either to reduce the impact of the rise in oil prices or for other things", he stated.

As a result, both blue chips and stocks more linked to the domestic cycle began to come under greater pressure.

The political scenario also increased investor caution. According to Lucinda, recent episodes involving senator Flávio Bolsonaro and the approaching electoral calendar have increased uncertainty about the 2026 presidential race.

"The market is looking at the election as something very difficult to predict," he said.

As a result, the window of opportunity that some analysts saw at the beginning of the year, when the Ibovespa reached close to 200 thousand points, appears to have closed.

"The party really seems to have ended long before Brazilians had the opportunity to enjoy it", he concluded.

For the next government cycle, regardless of who wins the elections, the analyst projects an environment marked by high inflation, weaker economic activity and high interest rates on the international scene, which should make credit more expensive and increase the demand for fiscal discipline.

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Source: CNN