Ibovespa falls to its lowest level in almost two months.

SAO PAULO (Reuters) - The Ibovespa fell to its lowest level in almost two months this Tuesday (27), affected by the cautious mood abroad, given concerns about economic slowdown, while locally the proximity of the elections generates caution among investors.

Eletrobras was the biggest negative contributor to the index, on a bad day for electric power company stocks, while Petrobras provided a counterpoint amid rising oil prices.

The Ibovespa fell 0,68%, to 108.376,35 points, the lowest closing level since August 5th and the third consecutive daily decline. The session's low was 108.120,26 points. Trading volume for the session was 27 billion reais.

The index opened higher, but gave back gains by late morning as Wall Street lost traction after more Federal Reserve (Fed) members signaled an appetite for further interest rate hikes, even at the risk of an economic recession.

James Bullard of the St. Louis Fed said he believes the Fed's plans to raise interest rates to around 4,5% by the end of this year will push U.S. monetary policy to a "restrictive level" that will slow the economy and ease inflation, while Charles Evans of the Chicago Fed spoke of the need for a further 1 percentage point increase this year.

Statements from Fed members had already weighed on stock markets in recent sessions. The S&P fell 0,2%, to a two-year low, after six consecutive declines, while the Nasdaq rose 0,3%, interrupting a negative streak. European stock market indices fell.

"Investors are watching every word spoken by voting members of the Fed," said Lucas Carvalho, chief analyst at Toro Investimentos. "A recession in the US and the eurozone is already a given, which brings great volatility and concern to investors."

Locally, a greater-than-expected deflation in September moved the market, as did the minutes from the last Central Bank meeting, in which the institution halted the cycle of interest rate hikes. Economists saw little new information compared to last week's statement.

There was also some caution in the market because of the presidential elections in Brazil on Sunday, according to market participants. "Nobody wants to take on greater risk before knowing the result," said Lucas Xavier, a technical analyst at Warren, who sees the Ibovespa in a "stagnation" zone in terms of chart patterns.

HIGHLIGHTS

- PETROBRAS PN advanced 0,7%, to 29,67 reais, amid a 2,6% rise in Brent crude oil prices, due to concerns about supply in the Gulf of Mexico following Hurricane Ian and a weaker dollar. However, PRIO ON fell 0,15% and 3R PETROLEUM ON declined 0,1%.

- ELETROBRAS ON fell 2,9% to 43,25 reais, in a negative session for electricity stocks. ENERGISA UNIT declined 3,7% and COPEL PNB retreated 3,2%.

- VALE ON shares fell 0,44% to 67,70 reais, even with the reaction of iron ore futures in Asia.

- GERDAU PN bucked the sector trend and rose 2,6% to 23,77 reais. METALÚRGICA GERDAU PN advanced 1,2%.

- Suzano ON rose 2,1% to 43,33 reais, reducing its year-to-date decline to 26,2%. The company's president, Walter Schalka, said the market is shortsighted regarding the company's current situation, especially the price of pulp, according to the Brazil Journal.

- ITAÚ UNIBANCO PN fell 0,9% and BRADESCO PN lost 0,8%, extending the decline from recent sessions.

- BRF ON gained 0,6%, to 13,54 reais, after JPMorgan raised its recommendation for the stock to "neutral," citing improved product prices, reduced corn costs, and a more reasonable valuation of the stock.

- ALPARGATAS PN, owner of the Havaianas brand, fell 4,8% to 21,03 reais, the biggest drop on the Ibovespa in the session.

- EMBRAER ON shares rose 1% to 12,59 reais after Indian company Blade placed an order for up to 200 electric vertical takeoff and landing vehicles from Eve, a subsidiary of the Brazilian aircraft manufacturer.

(By Andre Romani)

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