At a Glance
- Flavio Bolsonaro won 47% in round one. Lula took about 45%.
- Polls had Lula ahead by roughly 3 points.
- The Frankfurt-listed MSCI Brazil ETF jumped more than 16%.
- The runoff is later this month.
A surprise lead for the pro-market senator has investors expecting a big move in Brazilian stocks, bonds and the real.
Flavio Bolsonaro beat expectations in Sunday’s first round and heads into a runoff with President Lula. Brazilian markets open Monday, and analysts expect a strong start.
Key Details
Bolsonaro is a right-wing senator and the son of Jair Bolsonaro, who is serving 27 years for plotting a coup. He took 47% in a field of 12 candidates, while Lula got about 45%. Bolsonaro sells himself as a “more centered” version of his father, with tighter spending, privatizations and lower taxes.
Market Reaction
Overseas trading already points higher. Shares of Itaú Unibanco and Petrobras gained abroad. Brazil’s 2056 bond rose 1.4 cents to bid at 93.5 cents on the dollar.
Quantitas chief economist Ivo Chermont sees the dollar falling 2% to 4% and equities rising 4% to 6%. Four years ago, after Jair Bolsonaro’s stronger-than-expected first round, the real gained more than 4%, and the Bovespa jumped 5.5%.
Why It Matters
The real trades near 5.22 per dollar. Societe Generale sees it at 5.10 by the end of 2026 and possibly below 5.00 in the first half of 2027. Vontobel’s Thierry Larose says it is still unclear whether Bolsonaro would be more fiscally responsible than Lula, but markets will probably give him the benefit of the doubt.
Keep an eye on the runoff and on any clear signals from Bolsonaro about how he plans to fix the economy.
Stay ahead of every market-moving headline with QuoMarkets.
Source: Reuters
