Markets Rally as Flávio Bolsonaro Leads First Round

Overview

• Election count released Monday showed Flávio Bolsonaro with 47.03% of valid votes and Luiz Inácio Lula da Silva with 45.16%, putting the two into a second round on October 25.
• Global and domestic markets jumped immediately after the result with Brazil-focused ETFs and ADRs rising more than 10%, the EWZ up roughly 12%, and major Brazilian stocks powering gains.
• The real strengthened and the dollar fell below R$5 as the Ibovespa passed 200,000 intraday; B3 widened futures trading bands to manage the surge in volatility.
• Rates and bond futures plunged, with several maturities hitting their daily limits of oscillation as investors cut the fiscal risk premium on hopes of policy tightening under a pro‑PL government.
• Political shifts that boosted the PL’s congressional bench increase the odds of fiscal reform, but markets will watch announced spending cuts, official economic appointments, and where centrist voters move before the second round.