Brazil's presidential race is headed to a second round because no one cleared 50% in Sunday's vote, which sends the top two finishers back to the ballot. The matchup: sitting president Luiz Inácio Lula da Silva versus Flávio Bolsonaro, son of former president Jair Bolsonaro. Pre-election polling suggested Bolsonaro would likely trail in the first round, even as he was seen as a slight favorite in a runoff. Instead, he led with more than 47% and finished almost 2 points ahead.
Lula is seeking a fourth term. He returned to the presidency in 2022 after 12 years out of office by defeating then-incumbent Jair Bolsonaro. Lula's camp has sought to tie Flávio Bolsonaro with his father's attempts to challenge the 2022 outcome while casting the son as corrupt. The runoff is set for Oct. 25.
Elections reprice a country's stocks and currency before any policy changes. Market Briefs covers emerging markets free every weekday.
Traders quickly recalibrated. On Kalshi, bettors now give Bolsonaro better than an 80% chance to win, up from about 60% before Sunday's tally. On Polymarket, his odds climbed to 85% from 63%. Investors broadly view Bolsonaro as the more market-friendly option, pointing to his pledge of tighter fiscal policy at a time when Brazil's deficit was nearly 10% of GDP in June.
Assets rallied Monday. The iShares MSCI Brazil ETF (EWZ) rose more than 12%. Itau Unibanco's U.S.-traded stock climbed 15%, Banco Bradesco advanced 19%, and the Bovespa in Brazil added 8%.
The market read is straightforward: pricing now leans toward a Bolsonaro victory and tighter budget talk, and Brazilian stocks moved accordingly. That does not guarantee an outcome on Oct. 25, but it does set expectations and, for now, the valuations you are seeing. If you have emerging-markets exposure, this is one of those political moments that can swing returns in a hurry.
A runoff keeps the uncertainty priced in for several more weeks. Join Market Briefs free and follow the vote.
