Bovespa Falls Nearly 14% After Lula Reelection, Real Weakens 9%
Brazil's Ibovespa pared its drop to about 14% after Lula da Silva's reelection, while the real weakened 9% against the dollar, Market Talk reports.
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what happened
According to Market Talk, Brazil's Ibovespa index fell about 14% after leftist President Luiz Inácio Lula da Silva won reelection, paring a drop that reached 17% in early trade. The Brazilian real lost about 9% against the dollar. Investors had been counting on a win by conservative Flavio Bolsonaro, who had promised to cut government spending.
A conservative-leaning Congress elected earlier this month is seen as a likely check on government spending. MarketVector Indexes CEO Steven Schoenfeld expects the central bank to hold its rate at 13.75% next week, after five consecutive cuts.
In the US, Treasury yields were mixed ahead of Wednesday's Fed meeting, with CME data showing a 90% probability of an unchanged rate. The $69 billion two-year note auction was soft, with a bid-to-cover ratio of 2.59 against an average of 2.64, according to BMO.
why it matters
The key question for Brazilian markets is the fiscal path. Morningstar DBRS says that without fiscal consolidation, interest rates are likely to stay elevated, which keeps pressure on Brazilian equities and the currency.
market impact
Brazil: stocks and the real under pressure from fiscal risks and expectations of high rates
instruments
sources
- Nikkei Rises 1.7%, Led by Chip-Related Stocks — Market Talk, 27 October 2026 at 00:12 UTC
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