Brazil's main stock index, Ibovespa, closed 2025 with a 34% gain, the highest since 2016, driven by foreign capital inflows due to US interest rate cuts and Trump's protectionist policies. Gold was the most profitable investment, up 65%, while the dollar and bitcoin recorded losses. Brazil's job market showed resilience with unemployment at 5.2%, but public debt reached 79% of GDP.
The Ibovespa, Brazil's main stock index on the B3, closed 2025 at 161,127.44 points, with a cumulative gain of 34.1%, its best performance since 2016, when it rose 38.9%. This result was driven by an inflow of about 26 billion reais in foreign capital, attracted by Federal Reserve (Fed) interest rate cuts, which lowered the US benchmark from 4.25%-4.5% to 3.5%-3.75% per year, and President Donald Trump's protectionist tariffs, encouraging investment migration to emerging markets like Brazil.
Guilherme Falcão, partner at One Investimentos, highlighted the creation of new EWZ ETF shares on the US exchange as a vehicle for American investors to access the Brazilian market. Sectors like public utilities and banking stood out, reflecting investor caution in equities.
In the year's last trading session on December 30, the index rose 0.40%, influenced by positive labor market data: unemployment fell to 5.2% in the quarter ending November, the lowest since 2012, per IBGE's PNAD Contínua. The Caged recorded 85,864 formal jobs in November, marking 11 months of positive balance.
Claudia Moreno, economist at C6Bank, forecasts unemployment below 6% through the end of 2026 but warns of inflationary pressures in services, supporting the Selic at 15% until March. However, the general government gross debt hit 10 trillion reais in November, or 79% of GDP, the highest since 2021, due to accelerated spending and state-owned losses.
The Fed's minutes showed six of 19 members opposed the December cut, but the majority saw employment benefits. For 2026, further reductions are expected, aiding emerging markets. Per Elos Ayta, gold yielded 65%, topping stocks, while CDI paid 14.2%; the dollar fell 11% and bitcoin 17%. B3's trading volume dropped to 16.4 billion reais daily in Q3, the lowest since 2019, signaling potential fragility.
