Brazil’s benchmark Ibovespa index rose 0.87% to close at 171,990 points on June 25, reversing recent selling pressure as investors digested a softer-than-expected inflation print.
The rally was broad-based, with financials and mining stocks leading the charge as the real strengthened against the dollar.
The market move followed the release of the IPCA-15 preview for June, which came in below market forecasts.
The milder inflation data has immediately altered the probability landscape for monetary policy, reducing the urgency for further aggressive rate hikes by the Central Bank of Brazil.
Traders interpreted the print as a signal that the central bank may have more flexibility to pause or even cut rates sooner than previously priced in.
Banks and Vale were among the top performers, benefiting from the improved macroeconomic outlook and a stronger domestic currency.