Ibovespa posts worst week since 2022 as Middle East tensions weigh on markets

The Brazilian stock market closed Friday with losses mounting, a week that will be remembered as one of the worst since late 2022. The Ibovespa, the country's primary equity benchmark, fell 0.61% to settle at 179,364.82 points, but the real damage was cumulative. Over the five trading days just completed, the index shed 4.99%—the largest weekly decline in more than three years, matched only by the equivalent drop in mid-November 2022 and exceeded only by a 5.36% collapse in June of that year. The culprit was clear: geopolitical tension in the Middle East, where the U.S. and Israel launched strikes against Iran on the previous Saturday, prompting Iranian retaliation and leaving the region in a state of open hostility with no visible path toward de-escalation.

On Friday itself, President Donald Trump demanded Iran's "unconditional surrender," a statement that did little to ease market nerves. Hours earlier, Iranian President Masoud Pezeshkian had signaled on social media that mediation efforts were underway and that his country remained committed to lasting regional peace, though he made clear Iran would not back down from defending its sovereignty. The rhetoric from both sides suggested the conflict would persist, and markets responded by pulling back from risk. The trading volume on the day reached 32.58 billion reais, a substantial flow of capital, but it moved in the direction of caution.

The immediate economic consequence was a disruption to one of the world's most critical chokepoints: the Strait of Hormuz, through which vital flows of oil and natural gas pass daily. With shipping paralyzed, crude prices surged. The Brent contract closed Friday up 8.5%, settling at $92.69 per barrel. This spike rippled through global markets, raising inflation concerns and prompting reassessment of monetary policy trajectories, particularly in the United States, where employment data released the same day showed job losses and a rising unemployment rate. The S&P 500 fell 1.33% in response.

Within Brazil's market, the picture was mixed. Petrobras, the state-controlled oil giant, bucked the broader downturn. Its preferred shares climbed 3.49%, hitting new highs, buoyed by the international oil rally and by the company's own financial performance. In the fourth quarter of 2025, Petrobras generated 19.34 billion reais in free cash flow and announced a shareholder remuneration proposal of 8.1 billion reais. Company executives indicated that extraordinary dividends could be distributed this year if cash generation remained robust. Other oil-linked stocks followed: Brava ON rose 4.61%, Prio ON gained 4.27%, and Petroreconcavo ON edged up 0.16%.

The banking sector, by contrast, suffered across the board. Itaú Unibanco PN fell 1.33%, Bradesco PN dropped 1.41%, Banco do Brasil ON lost 1%, Santander Brasil Unit declined 2.51%, and BTG Pactual Unit closed down 2.01%. The aversion to risk that gripped global markets hit financial stocks hardest. Vale ON, the mining company, fell 2.99% for its seventh consecutive losing session, despite iron ore futures in China rising 1.38%—a disconnect that suggested sector-specific weakness rather than commodity-driven decline.

Two major corporate announcements also shaped individual stock movements. Embraer, the aircraft manufacturer, plunged 8.05% after reporting fourth-quarter adjusted net income of 832 million reais and providing 2026 guidance that fell short of consensus expectations. The company projected revenue between 8.2 and 8.5 billion dollars for the year, below the 8.689 billion dollars that analysts had been modeling on average. Delivery forecasts were raised—80 to 85 commercial aircraft versus 78 in 2025, and 160 to 170 executive jets versus 155—but the revenue miss dominated investor reaction. Separately, Vamos ON tumbled 7.24% after its parent company Simpar announced a capital increase involving the holding and its subsidiaries, with state development bank BNDESPar as the anchor investor. The operation also touched Movida ON, which fell 7.88%, and Simpar itself, down 4.31%.

Braskem PNA lost 1.57% after three consecutive gains, including a nearly 17% jump the day before and a 14% surge on Wednesday. The reversal came after Brazil's antitrust authority approved without restrictions the sale of Novonor's stake in the petrochemical company to IG4, a transaction that will make IG4 a shareholder alongside Petrobras while Novonor retains a 4% stake. The approval removed uncertainty but also removed the tailwind that had driven the stock higher.

Looking ahead, the market faces a technical adjustment: beginning Monday, trading hours on B3 will shift to align with daylight saving time in the United States, effective March 8, and later in Germany and England on March 29. The equity market close will move to 4:55 p.m. to 5 p.m. But the larger question hanging over markets remains unresolved: how long the Middle East conflict persists, whether the Strait of Hormuz remains disrupted, and what that means for oil prices, inflation, and the global monetary policy response that will follow.