The Brazilian stock exchange closed on Tuesday with a 1.5% gain, at 187,930 points, reaching the highest level since early May. The dollar, on the other hand, closed down 0.86%, at R$ 5.08, the lowest level in a month. The indicators recorded a positive day despite the adverse scenario abroad.
Analysts point to three main factors for the market's appreciation on Tuesday. First, the tightening in electoral polls, such as the Quaest poll released on Monday, which showed a tight race between Lula (PT) and Jair Bolsonaro (PL) in a potential runoff. The financial market had been revising its expectations in recent weeks based on these surveys.
The second factor was the return of foreign investors, who resumed buying Brazilian stocks after considering that the country's company prices were "undervalued." The third favorable element was Bank of America's recommendation to buy Brazilian stocks.
The combination of foreign investors purchasing reais with the Brazilian currency's exposure to oil contributed to the dollar's decline. The challenging external scenario contrasts with the positive performance of the Brazilian market, which reacted to favorable domestic conditions.
