The Ibovespa climbed more than 1% on Friday, setting a fresh intraday record above 142,000 points, after weaker-than-expected US labour data strengthened expectations of imminent Federal Reserve rate cuts.
InfoMoney reported that the benchmark index rose 1.60% to 143,248 points at 10:40 am in Brasília, after touching a new all-time high of 143,402 points earlier in the session.
The moves reflected renewed investor optimism that a softer US monetary stance will trigger capital flows back into emerging markets, with Brazil among the prime beneficiaries.
Payroll report sets the tone
The spike was sparked by the announcement of the much-watched US nonfarm payroll report.
The statistics showed that the US economy added 22,000 jobs in August, considerably below economists’ projection of 75,000 jobs.
The unemployment rate came in at 4.3%.
The poor employment data prompted a dip in Treasury rates, with the two-year note—a crucial barometer of rate expectations—falling 10 basis points to 3.489% shortly after its release.
Investors read the report as an indication that the US labour market is losing momentum, which strengthens the case for the Fed to begin relaxing monetary policy as early as September.
Global ripple effects
The prospect of US rate cuts is reshaping global capital flows, with analysts pointing out that lower Treasury yields make higher-yielding emerging markets like Brazil more attractive.
“We have a very positive combination for Brazil this morning,” said Bruna Sene, equity analyst at Rico, citing stronger risk appetite abroad, gains in European and US markets, and a weaker dollar.
She noted that the fall in the DXY index has bolstered the Brazilian real, adding momentum to local assets.
Sara Paixão, macroeconomics analyst at InvestSmart XP, said the slowdown in US job creation has strengthened market expectations for Fed cuts in September, October and December.
However, she cautioned that the pace and intensity of the easing cycle remain uncertain.
Room for the Ibovespa to climb further
The change in global monetary conditions provides room for further improvement for local markets.
According to Bruno Takeo, strategist for Potenza Capital, the Ibovespa can reach 150,000 points as of 2025, supported mainly by the interest rate differential and hardly due to Brazilian fundamentals.
The adjustment, he emphasised, is largely one of global capital allocation rather than one of Brazilian economic momentum.
On the other hand, the slightly above-expectation unemployment rate of 4.3% (up from 4.2%) remains at low levels based on historic standards and does not indicate an imminent recession, said RB Investimentos strategist Gustavo Cruz.
This number gives the Fed even more cover to reduce rates when lingering inflationary pressures still give them a reason to hold off, he said.
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