Markets
Brazil's Markets Had Their Best Day Since 2020 After the First-Round Vote
The Ibovespa jumped 7.7% to a record 206,912 on Monday, October 5, the iShares Brazil ETF rose 12.5%, and the dollar briefly fell below 5 reais for the first time since May. A runoff is set for October 25.
Brazil went to the polls on Sunday, October 4. With almost all votes counted, Flávio Bolsonaro finished first with about 47.0% of valid votes and President Luiz Inácio Lula da Silva second with about 45.2%. Neither reached the 50% needed to win outright, so the two will meet in a runoff on October 25. On Monday, Brazilian assets had one of their strongest sessions in years.
The Ibovespa, São Paulo's benchmark stock index, closed at 206,912, up 7.70% from Friday's 192,115. That's a record close, and the intraday high of 209,606 is a record too. It was the index's biggest one-day gain since March 24, 2020, in the middle of the pandemic rebound. In New York, the iShares MSCI Brazil ETF (EWZ) rose 12.54% to $42.98 — larger than the index move because it is priced in dollars and so also captured the currency — for its highest close since February 2020. Some Brazilian stocks listed in the US did even better: Itaú Unibanco's ADR gained 15.5% to a record, Nu Holdings 13.0% and Petrobras 11.5%.
The currency moved with the stocks. Sunday night's election-hour slide in the dollar, which we covered on Monday morning, turned out to be the start. On Binance's USDT/BRL market the pair dropped from about 5.17 to 5.12 in the 09:00 UTC hour, bounced to 5.21, and then fell sharply as Brazil's business day began: the 11:45 UTC candle alone took it from 5.146 to 5.00. It touched 4.99 in the afternoon — the first time below 5.00 since May 22 — and closed at 5.0338, down 3.44% and the real's strongest close since June 2. Volume was about $653 million, roughly double its 30-day average. At its best point on Monday afternoon, the real was about 5.7% stronger than at Sunday evening's peak of 5.2938.
A move like this says something about expectations, but it's worth being careful about what. Prices show that investors bought Brazilian assets aggressively after the result; they don't tell us how the runoff will go, and a three-week campaign leaves plenty of room for the picture to change. Two things are worth keeping in mind. First, the Ibovespa was already up strongly this year before the vote — 19% from its 2025 close of 161,125 — and Monday's jump took that to about 28%. Second, the runoff is a binary event of exactly the kind that produced Monday's gap, so volatility in both directions is likely to stay elevated until October 25. Our new guide on how elections move markets looks at why.