Índice Bovespa

So, immediately, the impact was widely felt in the markets because nobody expected, again, Lula to win.

So the Ibovespa, which is Sao Paulo's benchmark index, stock benchmark index, fell almost by 14%, and it was the biggest drop since March 2020, since the pandemic.

And at its lowest point in the aftermath of the election, it was more than 17% down.

The currency, the real, lost about 8% against the dollar.

Las elecciones impactaron en los mercados brasileños.

El iBovespa, índice bursátil del país, cayó más de diez por ciento y obligó a la Bolsa de San Pablo a suspender las operaciones durante treinta minutos y el real se depreció más de diez puntos porcentuales frente al dólar.

A la par, el rebote de mercado llegó hasta Argentina.

El riesgo país trepó a setecientos sesenta y cinco puntos, el dólar subió más de diez pesos, cerrando a mil quinientos sesenta oficial y las acciones locales en Nueva York cayeron hasta nueve coma cinco puntos.

Lula became the first candidate since Brazil restored direct presidential elections in 1989 to take office after finishing second in the first round.

The Ibovespa closed 13.9% lower, its largest daily fall since March 2020.

Trading was halted for 30 minutes after the index triggered a circuit breaker.

The real fell more than 11% at its weakest point, one of its largest intraday declines on record, before closing 8.1% lower at $5.415 per US dollar.

Brazil's five-year credit default swap spread rose from 120 to 144 basis points, and the Treasury canceled two scheduled government bond auctions.

The sell-off is consistent with our expectation that Lula's victory would unwind much of the rally in Brazilian assets after the first round.

By Friday, the Ibovespa had ended almost 7% above its pre-first round level, and the Real had strengthened nearly 5% over the same period as investors anticipated tighter fiscal policy under a Bolsonaro administration.

Fiscal credibility is now the main test.

The attack is the latest in a series of incidents linked to misinformation surrounding the outbreak.

To South America, where Brazil's stock exchange halted trading after the Ibovespa index plunged 10% amid political uncertainty following President Luiz Inácio Lula da Silva's re-election.

Defeated candidate Senator Flavio Bolsonaro called for Sunday's runoff results to be annulled, while the Brazilian real weakened by about 12% against the US dollar and the Treasury cancelled upcoming bond auctions.

Chetam House, Latin American program director Dr. Christopher Sabatani, says Lula's comeback was historic and followed a major overhaul of his campaign strategy.

The markets had openly bet on Flavio and on his tesseraco, that is, sweeping spending cuts inspired by Millet's chainsaw.

After the first round, the Ibovespa rose 7.7% in a single session.

Monday's reaction is a political ultimatum to the Lula government, that it must prove that it is capable of imposing upon the working class the same program of cuts the bourgeoisie expected from Flavio.

Analysts at the British bank Barclays listed the signals they are waiting for, including the choice of finance minister, the 2027 fiscal target and the cost of the campaign promises.

The surprise re-election of Lula means an unlikely push for the fiscal austerity necessary for lower interest rates in Brazil.

Today, the real weakened against the dollar by more than 8%, and the Ibovespa stock index fell 13%.

In recent weeks, the Cook Political Report has continued to shift more House seats toward Democratic victories, and now Republicans are shifting their tactics to try to hold back the tide.

Bloomberg's Amy Morris has more from Washington.