01.06.202620:49:39UTC+00Ibovespa Falls as Middle East Tensions Lift Oil Prices

The Ibovespa fell 0.9% on Monday, closing at 172,197 points, as renewed tensions in the Middle East undermined risk appetite and reignited concerns over inflation and interest rates. Although US President Donald Trump stated that Israel and Hezbollah had agreed to halt mutual attacks in Lebanon and that talks with Iran were ongoing, fresh outbreaks of violence threatened diplomatic efforts to end the conflict.

Oil prices jumped following reports that negotiations between the United States and Iran had stalled, heightening stagflation fears and driving bond yields higher. The banking sector led the declines, with Itaú down 1.7%, Bradesco losing 1.1%, and Itaúsa retreating 1.2%.

On the macroeconomic front, the S&P Global Brazil Manufacturing PMI slipped to 49.1 in May from 52.6 in April, signaling a renewed contraction in industrial activity. The weaker data weighed on manufacturing names such as WEG, which fell 2.5%. Utilities also dragged on the index, with Auren down 2.4%.

Bucking the negative trend, Petrobras advanced 0.9%, supported by the rally in crude prices.