Stock Market Plummets: Understand Why the Crisis Between Brazil and the USA Put Banks at the Center of the Collapse

Written by Noel Budeguer

Published on 20/08/2025 at 16:06

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Ibovespa Has Worst Day of the Month with 2.1% Drop: Understand How the Political Crisis Became a Threat to the Economy

Tuesday was a day of tension in the Brazilian economy. The main index of the São Paulo stock exchange, the Ibovespa, fell 2.1% and closed the day at 134,000 points. This index serves as a thermometer for the market, gathering the shares of the largest companies traded in the country. When it drops, it means that investors are selling more than buying, indicating distrust and fear regarding the future.

The decline was mainly driven by the shares of major Brazilian banks such as Banco do Brasil, Santander, Itaú, and Bradesco. They recorded significant losses because they found themselves caught in a delicate dispute between the Supreme Federal Court (STF) and the United States.

What Is Happening Between Brazil and the United States

On Monday, STF Minister Flávio Dino made a decision to try to counteract the effects of the sanctions that the United States imposed on Minister Alexandre de Moraes under the so-called Magnitsky Act. This law is used by Washington to punish officials accused of violating human rights or acting against democracy.

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The Risk for Banks and Brazil

According to sources in the financial sector, if Brazilian banks disregard the U.S. agency that enforces the sanctions, they could be virtually excluded from the global payments system. This would have a direct impact on the economy, complicating international operations and reducing investors’ confidence.

A bank director interviewed by Reuters summarized the situation: “Brazil has no choice. The difference in power between the American and Brazilian economies leaves us in a position of subjection.”

Banco do Brasil stated in a note that it is prepared to handle complex situations and that it complies with all Brazilian and international laws in the countries where it operates.

President Lula also met on Tuesday with ministers and leaders of state-owned banks and the Central Bank to discuss the crisis and attempt to reduce the risks of instability.

Drop Also in Other Companies

In addition to banks, other companies experienced significant losses. Raízen, from the energy sector, plummeted nearly 10% after Petrobras denied any partnership project with the company in the ethanol area.

On the positive side, few stocks escaped the general downturn. Companies like Minerva, Suzano, and Hypera managed to record small gains, but they were exceptions in a predominantly negative day.

Analysts emphasize that the Ibovespa is facing difficulties in advancing in the short term, as the international and political climate remains heavy. For many investors, the option at this moment is to seek protection in the dollar, selling stocks until the scenario becomes clearer.

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Stock Market Plummets: Understand Why the Crisis Between Brazil and the USA Put Banks at the Center of the Collapse

Ibovespa Has Worst Day of the Month with 2.1% Drop: Understand How the Political Crisis Became a Threat to the Economy

What Is Happening Between Brazil and the United States

The Risk for Banks and Brazil

Drop Also in Other Companies

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Stock Market Plummets: Understand Why the Crisis Between Brazil and the USA Put Banks at the Center of the Collapse

Ibovespa Has Worst Day of the Month with 2.1% Drop: Understand How the Political Crisis Became a Threat to the Economy

What Is Happening Between Brazil and the United States

The Risk for Banks and Brazil

Drop Also in Other Companies

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