Company fundamentals are once again expected to take a back seat.

Fourth-quarter results had already confirmed analysts’ concerns, showing a real economy squeezed by high borrowing costs. But they also offered a clear picture of how geopolitical tensions, inflation and the reshaping of global supply chains are likely to steer corporate performance in the first quarter and throughout 2026.

“The fourth-quarter earnings season was weaker than expected and weaker than what companies had been showing in 2025,” said Fernando Ferreira, chief strategist at XP. Retail was the negative highlight, hit by slower gross domestic product growth and calendar effects that reduced store traffic in December.

“We already thought it would be a weaker season because of the impact of interest rates on the real economy. And that was, to some extent, what happened,” said Carlos Eduardo Sequeira, head of research at BTG Pactual. “We saw a sharp slowdown in profit, revenue and EBITDA growth during the fourth quarter compared with earlier periods.”

Aline Cardoso, head of equity research and strategy at Santander, said the earnings season showed a wide gap between domestic companies, whose results were hurt by 15% interest rates, and commodity exporters, which performed somewhat better. “It was a season marked by a resilient but slowing economy, and by increasingly cautious corporate messaging,” she said.

Export boost

For the first quarter, the divide between companies exposed to the domestic market and exporters is expected to widen. The main swing factor for earnings forecasts will be oil prices.

The war involving the United States, Israel and Iran has sharply altered expectations, driving up profit estimates for Brazil’s stock market because of the heavy weight of companies such as state-owned oil giant Petrobras.

“The market has been much more focused on macro than on company-specific factors,” XP’s Ferreira said. “The war and the spike in oil prices are proving to be a very strong trigger for earnings revisions. War, oil, inflation and interest rates are having a far greater impact than company-specific fundamentals in the first quarter.”

Although Prio’s management said on an earnings call that the first quarter still partly reflects the release of Venezuelan inventories after the fall of Nicolás Maduro’s government, analysts see the oil producer as the main near-term beneficiary because it is less constrained by hedge positions than rivals Brava and PetroRecôncavo.

In a recent report upgrading Petrobras to buy, Bank of America said higher oil prices should boost the state-controlled company’s results, especially cash generation for shareholders, easing recent concerns that it might need to take on more debt to maintain dividend payments.

Vale and trade tensions in focus

Another investor favorite in the current period of instability is Vale. In its first-quarter operating results, the Brazilian mining company showed resilient iron ore output and strong performance in base metals, which analysts see as important catalysts, together with high metal prices, for its financial results in the period.

The first quarter will also reflect the fallout from the tariff and trade dispute with the United States. The U.S. Supreme Court’s decision in February to strike down Donald Trump’s sweeping tariffs has already lifted sentiment among Brazilian exporters.

Tupy, a Brazilian maker of engine blocks and other auto parts, expects a significant increase in orders from automakers starting in the second half, while gun manufacturer Taurus said the 10% tariff imposed by Trump has already been offset by price increases passed on in the U.S. market.

Under pressure

But companies tied to the local economy, already grappling with a slowdown, now face worsening conditions. The surge in fuel prices is putting pressure on supply chains and threatens to rekindle inflation, limiting the Central Bank’s room to maneuver.

“We now see 250 basis points of cuts in the Selic base rate, with the Central Bank acting more cautiously, and that has a negative impact on companies,” Sequeira said.

With rate cuts likely to be slow and gradual, bringing little immediate relief to financial expenses, companies are moving ahead with their own adjustments. The push for technological innovation to reduce fixed costs has surged, and mentions of artificial intelligence in recent earnings calls have tripled, Santander’s Cardoso said.