Ibovespa Plunges as Lula Victory Triggers Broad Selloff
The Ibovespa plunged 13.7% to close at 176,906 on Monday as Brazilian assets sold off following President Lula’s victory over Flávio Bolsonaro in the presidential runoff. The decline reversed gains after the first round, when Bolsonaro outperformed polls and finished ahead of Lula. Investors had viewed a Bolsonaro administration as more likely to curb public spending, seen as key to lowering interest rates. Markets are now reassessing fiscal risks, including persistent primary deficits and rising public debt, alongside institutional uncertainty surrounding the election. Losses were broad-based: Petrobras fell 8.5%, Itaú dropped 13.2%, Bradesco sank 21.2%, Banco do Brasil plunged 27.3%, Itaúsa lost 12.1% and Axia declined 11.8%. In contrast, Vale gained 4.5% ahead of its earnings release, while WEG rose 5.1% after announcing plans to acquire L&S Electric’s PCS business.
The Ibovespa plunged 13.7% to close at 176,906 on Monday as Brazilian assets sold off following President Lula’s victory over Flávio Bolsonaro in the presidential runoff. The decline reversed gains after the first round, when Bolsonaro outperformed polls and finished ahead of Lula. Investors had viewed a Bolsonaro administration as more likely to curb public spending, seen as key to lowering interest rates. Markets are now reassessing fiscal risks, including persistent primary deficits and rising public debt, alongside institutional uncertainty surrounding the election.
Losses were broad-based: Petrobras fell 8.5%, Itaú dropped 13.2%, Bradesco sank 21.2%, Banco do Brasil plunged 27.3%, Itaúsa lost 12.1% and Axia declined 11.8%. In contrast, Vale gained 4.5% ahead of its earnings release, while WEG rose 5.1% after announcing plans to acquire L&S Electric’s PCS business.