Brasília, 26 October. Brazil's main stock index Ibovespa fell 10% on Monday, triggering an automatic trading halt: investors had expected a change of government, and Luiz Inácio Lula da Silva's run-off victory caught the market off guard.
On offshore trading the dollar rose almost 11% against the Brazilian real; the November real future fell almost 10% in the first hours after the result. In recent weeks Brazilian stocks, currency and bonds had risen on expectations that opposition candidate Flávio Bolsonaro would win. According to final figures from the Superior Electoral Court, Lula won 51.79% (64.26 million votes) and Bolsonaro 48.21% (59.83 million), with turnout at 80.78%. Bolsonaro does not accept the result.
Russian President Vladimir Putin, in a telegram published on the Kremlin website, congratulated Lula on his re-election and on his 81st birthday: "The results of the vote have fully confirmed your fellow citizens' recognition of your outstanding leadership qualities and their support for the course of sustainable socio-economic development of the country and the protection of its sovereignty and legitimate interests on the world stage," the message says. Putin promised to continue working together within the UN, BRICS and the Group of Twenty. Iranian President Masoud Pezeshkian also congratulated Lula.
What it means: The political result of the election, a continuation of Lula's course, was met with a sell-off by financial markets and with congratulations from Russia and Iran, Brazil's BRICS partners.
Who benefits: Buyers of cheaper Brazilian assets; according to Bloomberg analysts, state-owned Petrobras, to which Lula assigns a big role in industrial policy, may gain. Holders of the real and Brazilian bonds lose.
Background: Lula served two terms as president, from 2003 to 2011, and won again in 2022; he will be 81 when he takes office, making him the oldest president in Brazil's history. Kazakh President Kassym-Jomart Tokayev also congratulated him.
We have also reported that Flávio Bolsonaro refused to accept Lula's victory and that Tokayev congratulated Lula on his re-election.
