Brazilian Stock Market Surges As Global Rate Cuts Outshine Domestic Worries

(MENAFN- The Rio Times) Brazil's stock market hit a record high this week, reflecting a story that goes beyond local economics. On Wednesday, the main Ibovespa index closed at 145,593.63 points after reaching a peak of 146,330.

This climb followed a new policy move by the US Federal Reserve, which cut its interest rate by 0.25 percentage points to between 4% and 4.25%.

With US money becoming cheaper, global investors started looking for markets where interest rates remain high, and Brazil stands out. The country's central bank, however, held its key rate steady at 15%, choosing to wait before easing.

Investors responded by increasing bets on Brazilian stocks, especially in local banks like Bradesco and Santander, and in retail leaders such as Magazine Luiza.

Foreign funds moved into the country seeking higher returns, and the Brazilian real stayed relatively unchanged against the US dollar near 5.30.



Among the big winners of the day, Raia Drogasil rose 6.06%, Magazine Luiza gained 5.31%, Sendas Distribuidora advanced 4.55%, Bradesco (BBDC4) increased 3.47%, and Santander Brasil (SANB11) added 2.29%.

At the same time, C&A Modas dropped 2.44%, Marfrig slipped 2.18%, CBD fell 2.17%, Banco do Brasil (BBAS3) lost 0.32%, and Vale (VALE3) edged up only 0.17%.
Global Flows Lift Ibovespa Despite Local Risks
This rally did not rest only on policy. Recent labor data show Brazil with unemployment just below 5.7%, its lowest level since 2012. Inflation, though slightly above the latest national target, remains under 5.2%.

But signs of slower economic activity, like three consecutive drops in a key monthly growth index, suggest a more complicated backdrop. Risk remains present for both optimism and caution.

The real driver behind the Ibovespa's record lies in global changes. Weak job growth and falling yields in the US made Brazil more attractive for investors searching for better returns.

This shift has led to a wave of foreign capital flowing into Brazilian assets. Analysts note that the positive spread between local and US interest rates was the decisive factor, outweighing domestic obstacles in the near term.

Technical analysis confirms market strength. The Ibovespa surpassed resistance levels, trading above the 20-day moving average, and showed solid momentum as indicated by its RSI above 70.

The MACD on both daily and four-hour charts confirmed a bullish trend. Volume stayed stable, supporting the market's credibility. The Global Liquidity Index, a gauge for international appetite for risk, stayed high, further supporting Brazil's markets.

The story behind the numbers is this: local fundamentals remain steady, but not spectacular, while international investors are chasing yield.

As long as the US keeps rates lower and Brazil stays cautious, foreign flows may continue. Still, any major change in global sentiment or a reversal in rate trends could quickly test this optimism.

MENAFN18092025007421016031ID1110078180