Market Rebounds Amid 2026 Budget Uncertainty; Expert Predicts Q3 2025 Bank Earnings

• Why Are Markets Recovering After Last Week’s Turmoil?
• How Did Brazil’s Tax Policy Shift Affect Domestic Assets?
• Corporate Spotlight: Raízen’s Debt Drama and Bank Earnings
• Global Wildcards: U.S. Shutdown and Beyond
• FAQ: Your Burning Questions Answered

The financial markets are showing signs of recovery after a turbulent week, driven by global tensions and domestic fiscal uncertainties. Analysts weigh in on the impact of U.S.-China trade threats, Brazil’s budget challenges, and corporate earnings season. Key highlights include Raízen’s debt rumors, bank performance projections, and the looming U.S. government shutdown. Dive into the details below.

Why Are Markets Recovering After Last Week’s Turmoil?

After a risk-off Friday (October 10, 2025) fueled by escalating U.S.-China tensions, global markets are clawing back losses. The BTCC team notes that the rebound stems from softened rhetoric by U.S. officials over the weekend. Treasury Secretary Scott Bessent and former President TRUMP walked back threats of new tariffs on Chinese goods, particularly targeting rare earth minerals. "Friday saw equities plunge, the USD/BRL spike, and gold rally—a classic risk unwind," said a BTCC analyst. "But the de-escalation shifted sentiment."

How Did Brazil’s Tax Policy Shift Affect Domestic Assets?

The expiration of Provisional Measure 1303 (MP 1303), which proposed higher taxes on investments, buoyed risk assets. "Letting MP 1303 lapse was a win for equities," the analyst added. "It would’ve killed long-term incentives for fixed income while hiking stock market taxes." However, the MOVE leaves a R$40 billion hole in the 2026 budget, forcing the government to consider spending cuts, budget freezes, or new revenue streams—likely the latter.

Corporate Spotlight: Raízen’s Debt Drama and Bank Earnings

Raízen (RAIZ4) denied bankruptcy rumors, emphasizing its asset sales and debt restructuring. "Their liquidity position doesn’t justify creditor protection," the BTCC team clarified. Meanwhile, Q3 2025 earnings season kicks off with divergent bank forecasts:

• Itaú (ITUB4): Expected to lead peers with healthy credit portfolios.
• Bradesco (BBDC4): Steady profitability recovery after years of underperformance.
• Santander (SANB11) & Banco do Brasil (BBAS3): Agribusiness headwinds may dent results, especially for BB.

Global Wildcards: U.S. Shutdown and Beyond

The 13-day U.S. government shutdown remains a market overhang, while commodity price swings add volatility. For real-time updates, follow TradingView’s Brazil equity indices.

FAQ: Your Burning Questions Answered

What triggered Friday’s market sell-off?

Trump’s renewed tariff threats against China sparked a global risk-off move, reversing only after officials softened their tone.

How does MP 1303’s expiration impact investors?

Short-term relief for equities, but 2026 fiscal uncertainty rises as the government scrambles for replacement revenue.

Which Brazilian bank is most at risk in Q3?

Banco do Brasil faces agribusiness delinquency pressures, potentially posting weaker results than Q2.