The market had overcorrected, and Thursday was simply adjusting back to reality.
Ibovespa gained 0.72% to 178,365 points, recovering from a 3.8% weekly decline and lowest close since March 20. Political uncertainty from Flávio Bolsonaro controversy caused sharp 2% drop previous day; market viewed recovery as correction of 'exaggerated' reaction.
- Ibovespa rose 0.72% to 178,365 points after three consecutive losses and a 3.8% weekly decline
- Political controversy over senator Flávio Bolsonaro's conversations about film financing caused a 2% drop Wednesday
- Banco do Brasil cut 2026 profit guidance to 18-22 billion reais; first-quarter adjusted profit fell over 50% year-over-year
- Trading volume reached 30.1 billion reais; S&P 500 rose 0.77% and hit new highs
Ibovespa rose 0.72% after three consecutive losses, driven by corporate earnings and easing Treasury yields. Recovery followed political controversy involving senator Flávio Bolsonaro.
São Paulo's stock market clawed back ground on Thursday after three straight days of losses, closing up 0.72% at 178,365 points. The recovery felt less like conviction and more like relief—a market catching its breath after being spooked. Just the day before, the Ibovespa had tumbled nearly 2% at its worst moment, dragged down by political turbulence that had rattled investors' confidence in the country's near-term stability.
The source of that anxiety was a report from The Intercept Brasil revealing conversations between senator and presidential hopeful Flávio Bolsonaro and Daniel Vorcaro, a former bank owner, discussing substantial payments to finance a film about Flávio's father, ex-president Jair Bolsonaro. The senator denied any wrongdoing, but the damage to market sentiment was immediate and sharp. By Wednesday's close, the index had accumulated a 3.8% decline for the week and hit its lowest level since March 20. The financial establishment had spoken: political risk was real, and it was priced in.
Thursday's rebound suggested the market was recalibrating. Wall Street's own gains—the S&P 500 rose 0.77% and hit fresh highs—provided cover for a local recovery. Treasury yields eased, oil prices steadied, and the broader mood shifted from panic to pragmatism. Marco Tulli Siqueira, superintendent at Necton/BTG Pactual, framed it plainly: the market had overcorrected on Wednesday, and Thursday was simply adjusting back to reality. He acknowledged that Brazilian equities had been under pressure from foreign capital outflows, but his outlook remained constructive.
The day's trading revealed which sectors and companies could absorb the political noise and which could not. Itaú Unibanco, the market's heavyweight, advanced 1.94% after steep losses the previous day, pulling the banking sector higher with it. Bradesco rose 1.08% and Santander Brasil edged up 0.44%. But Banco do Brasil, which had just cut its full-year profit guidance to a range of 18 to 22 billion reais—down from prior expectations—closed essentially flat despite briefly turning positive. The bank's first-quarter adjusted net profit had collapsed more than 50% compared to the same period last year, and its return on equity had fallen to 7.3%. Management tried to project confidence, pointing to opportunities in personal lending and high-income segments, but the numbers told a harder story.
Petrobras shares bounced back from Wednesday's steeper declines, with the preferred shares up 0.96% and ordinary shares up 0.82%, as crude oil prices stabilized. The Brent contract closed essentially flat at $105.72 per barrel. In the mining and steel sector, Vale fell 1.7% after gaining more than 3% earlier in the week, while Usiminas surged 7.97% and Gerdau rose 1.16%. CSN, the steelmaker, climbed 4.71% on the back of solid first-quarter results—adjusted Ebitda of 2.6 billion reais, up 5.5% year-over-year—and news that its asset sale process, which includes divesting its cement unit, had attracted more interested buyers than expected.
Pharmaceutical company Hypera gained 3.54% after Citi upgraded the stock to buy and raised its price target to 28 reais from 26. Retailers C&A and Lojas Renner climbed 5.84% and 4.41% respectively, riding a broader wave of optimism. Braskem, the petrochemical giant, lost momentum and closed down 0.49% despite having reported a net profit of 1.45 billion reais in the first quarter—more than double the prior year—because management was focused on securing additional working capital to boost Ebitda. Agricultural company SLC Agrícola fell 1.59% after reporting first-quarter net profit of 236 million reais, down 53.8% from the same period in 2025. Outside the main index, travel operator CVC Brasil dropped 11.27%, its adjusted Ebitda of 93.7 million reais in the first quarter representing a 10.5% decline year-over-year.
The session's total trading volume reached 30.1 billion reais. The market had moved from panic to parsing—from broad-based fear to the granular work of separating which companies could weather uncertainty and which could not. The political noise had not gone away. But for one day, at least, investors decided it was manageable.
Citas Notables
The market reflected adjustments to a reaction that was somewhat exaggerated to the news about Flávio and Vorcaro— Marco Tulli Siqueira, superintendent at Necton/BTG Pactual
Banco do Brasil is betting on personal lending to improve profitability, particularly in high-income segments and payroll-deducted loans— Banco do Brasil executives
La Conversación del Hearth Otra perspectiva de la historia
Why did the market fall so hard on Wednesday if the Bolsonaro story was just conversations about a film?
Because in markets, the story matters less than what it signals. A senator discussing large payments with a banker—that's not just gossip, it's a potential governance problem. Investors don't know where it leads, so they assume the worst.
But Thursday it recovered. Does that mean the problem went away?
No. It means the market decided it had overreacted. One day of panic selling can be irrational. The next day, cooler heads ask: is this actually going to derail the economy? Usually the answer is no, so you buy back in.
What about the banks? Itaú bounced back but Banco do Brasil stayed flat despite being down so much.
Itaú is the market leader—it has pricing power and diversification. Banco do Brasil is struggling with profitability. When the market recovers, it lifts all boats, but some boats have holes. BB's numbers are genuinely bad, so even on a good day, it can't climb much.
The CSN steel company had good results but Vale fell. How does that work?
Vale is bigger and more sensitive to global growth expectations. Steel companies like CSN are benefiting from specific conditions—in their case, strong demand for their assets. But Vale's fate depends on what China does next, and that's still uncertain.
So the recovery is real, or is it just traders covering their shorts?
Probably both. Some of it is short covering—people who sold on Wednesday buying back to lock in gains. But some is genuine reassessment. Wall Street's strength helped. Lower Treasury yields helped. The question is whether it sticks, and that depends on whether the political story gets worse or fades.