Market sees Ibovespa struggling to regain momentum in the 2nd semester

The main index of the Brazilian stock market, Ibovespa ended the first half with an increase of 6.77% in the partial accumulated of 2026.

The period was one of great return on the Brazilian Stock Exchange, which surpassed the 198 thousand points mark in April, making investors dream of the 200 thousand points mark.

Since then, however, Ibovespa has been recording a sequence of negative months. With 172,024.12 points recorded at the end of Tuesday's trading session (30), the index registered a loss of 1.01% in the month of June.

The initial impulse registered by the market "came with a discounted Ibovespa multiple, a need for diversification on the part of global investors and an excitement about emerging markets right at the turn of the year", recalls Rafael Espinoso, strategist and portfolio manager at GCB.

In January, B3 recorded a record net inflow of R$26.31 billion. From then on, however, the flow declined, until May saw the largest outflow of resources from the stock exchange since 2022.

Perspectives
And in the market, there is skepticism that the stock market can recover its momentum in the second half of the year and take off again as it did in the first half of the year.

The momentum slowed and there was a "reduction of foreigners in all assets", according to David Beker, head of Economics in Brazil and Strategy for Latin America at BofA (Bank of America), who highlights that international capital was the main driver of the stock market.

For him, the uncertain external macroeconomic scenario is the main culprit for the change in direction of foreign investors.

The economist observes that capital flows have not favored Brazil, but that this is due more to international factors - expectations of rising interest rates in the United States, allocations to artificial intelligence and the cooling of tension in the Middle East, which reduced oil prices beyond expectations - than domestic ones.

And, negatively for the stock market, he mentions that there are no expectations of major triggers for the Brazilian market to resume the rally seen previously.

The main factor that could restore the attractiveness of Brazilian variable income is, according to Virgilio Lage, specialist at Valor Investimentos, monetary policy.

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If interest rates fall, risk appetite grows in the face of the lower returns that fixed income would provide. However, a scenario with a lower Selic in Brazil still seems distant.

The market believes that the basic interest rate should remain above 11% until mid-2028, today the furthest date for which the BC (Central Bank) determines the expectations of the Focus bulletin.

And in addition to expectations about interest rates, "the risk remains with the fiscal situation, the elections, the slowdown in the Chinese economy and the behavior of commodities", highlights Lage.

Uncertainty also applies to exchange rates. The dollar opened at R$5.48 for the year, and even operated below R$5 between April and May. Since then, it has risen again.

When asked about the prospects, Emerson Jr, head of Offshore at Convexa Investimentos, highlights that "we are in a bad period from a fiscal point of view, focus is returning to this and there is uncertainty about the election".

For Rafael Espinoso, there are, however, fundamentals that could favor the country in the last six months of the year.

"We are back to operating at a discounted P/L multiple, with a still good exchange rate abroad and a tight election, with pro-market momentum in Latin America."

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Source: CNN