Analysts Expect Brazil Market Plunge After Lula's Election Win
Barclays, ING, Morgan Stanley and JPMorgan forecast a sharp selloff in Brazilian assets after Lula defeated Flavio Bolsonaro, per Reuters.
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what happened
According to Reuters, analysts expect a sharp selloff in Brazil's financial markets on Monday after President Luiz Inacio Lula da Silva defeated Flavio Bolsonaro. The stock market had hit a record high after the first round, when results pointed to a Bolsonaro win, lifting hopes for tighter fiscal policy.
Barclays said USD/BRL could initially reach the 5.50 area and Brazilian sovereign bonds could fall about 300 basis points. ING expects the dollar to rise 5-7% against the real and the Bovespa to suffer double-digit losses. Morgan Stanley sees a roughly 200bp fast repricing of fiscal risk and possible rate-hike pricing. JPMorgan cut Brazil government bonds to underweight and expects circuit breakers to trigger.
why it matters
Markets will focus on the finance minister pick, spending plans and Bolsonaro's response to the result. Exporters may benefit from a weaker real, while domestic cyclicals are seen falling hard, according to JPMorgan.
market impact
Brazilian assets: weaker real and selloff in stocks and bonds on fiscal concerns
tags
instruments
sources
- Analysts forecast Brazil market falls after Lula turnaround win — Reuters, 26 October 2026 at 10:07 UTC
- Analysts forecast Brazil market plunge after Lula turnaround win — Reuters, 26 October 2026 at 12:26 UTC
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