Brazilian financial markets suffered a sharp sell-off at Monday’s open after Luiz Inácio Lula da Silva defeated Senator Flávio Bolsonaro in Sunday’s presidential runoff, overturning expectations in prediction markets and among investors. The result sent the country’s stock market down by more than $200 billion in value and pushed the main exchange to impose its first circuit breaker since the COVID-19 pandemic.
Stocks and currency react to surprise result
The iShares MSCI Brazil ETF (EWZ), a New York-listed fund holding a basket of Brazilian shares, fell as much as 26% from its Friday closing level of about $42.60. It touched $31.40 before recovering part of the decline, trading around $32.84, or roughly 23% lower, at 10:38 a.m. Eastern time.
The move wiped out the fund’s gains for the year. EWZ had risen 34% through Friday, leaving it close to where it began 2026 after Monday’s decline. The scale of the fall was particularly notable because the ETF represents large Brazilian companies rather than a single highly speculative asset.
Brazil’s benchmark Ibovespa index fell as much as 17%, reaching approximately 170,000 points. At the same time, the dollar gained as much as 12% against Brazil’s real. For investors measuring their returns in dollars, the combination of a weaker Brazilian currency and falling local shares produced a loss of roughly 26% at the market’s worst point, broadly matching EWZ’s low.
B3, the São Paulo stock exchange, halted trading for 30 minutes after the Ibovespa dropped 10% from Friday’s close. A circuit breaker is an automatic trading pause intended to slow disorderly selling and give market participants time to assess rapidly changing conditions. The index continued to decline after trading resumed.
Investors had positioned for a Bolsonaro win
The market reaction reflected how heavily investors had leaned toward a different electoral outcome. Flávio Bolsonaro unexpectedly finished ahead of Lula in the first round on October 4, receiving 47.03% of valid votes compared with Lula’s 45.16%.
The following day, the Ibovespa jumped 7.85%, while EWZ gained more than 10%. Investors were betting that a Bolsonaro administration would pursue tighter public finances and potentially create room for lower interest rates. Monday’s losses erased that post-first-round rally. At their lows, the Ibovespa was about 11% below its October 2 closing level.
Prediction markets had also assigned Bolsonaro a strong advantage shortly before the runoff. Polymarket gave him an 82% probability of victory the day before the vote, while Kalshi put his chances near 80% on Sunday morning. In these markets, a contract paying $1 if a candidate wins trades at 80 cents when participants assess the candidate’s probability of winning at 80%.
The polling picture was less decisive. Datafolha’s latest survey showed the candidates tied at 50% each among valid votes, while a mid-October CNT/MDA poll gave Bolsonaro a narrow lead of 50.5% to 49.5%. Lula ultimately won 51.79% of the vote against Bolsonaro’s 48.21%, according to Brazil’s Superior Electoral Court. The difference amounted to about 4.4 million votes.
Bolsonaro challenges the election result
The political uncertainty increased after Bolsonaro said Sunday night that he did not recognize the result and would ask the courts to annul the election. His position reversed a pledge made in August to respect the outcome.
Bolsonaro objected to a decision by Supreme Court Justice Cristiano Zanin to extend voting until 7 p.m. at the request of Lula’s campaign. Bolsonaro argued that the move changed the rules during the election. His own campaign had separately requested additional voting time in parts of three states.
“It is impossible to recognize the result of the elections in the context in which these things happened,” Bolsonaro said in Portuguese outside his campaign headquarters in Brasília. He added that his legal team would seek annulment of the election.
The challenge adds a new source of uncertainty for Brazilian assets after a result that had already surprised traders. The immediate market response showed how quickly political expectations can affect equities, currencies and trading conditions when investors have positioned for a particular outcome.
Moneyiar market picture
Moneyiar data at the stated times show the following prices and moves:
- Audiera (BEAT): $0.0966461527, up 28.94% over 24 hours and down 22.33% over seven days, as of September 12, 2026, at 03:59 +03:30.
- RealLink (REAL): $0.0100747766, down 86.56% over 24 hours and 86.35% over seven days, as of September 15, 2026, at 07:04 +03:30.
- REAL (ASSET): $0.1927395029, up 6.94% over 24 hours and 3.94% over seven days, as of October 25, 2026, at 22:39 +03:30.
- Zilliqa (ZIL): $0.0018973706, down 5.04% over 24 hours and 14.28% over seven days, as of October 25, 2026, at 22:39 +03:30.
The election and market figures in this article are based on reporting by Decrypt and the supplied Moneyiar market data.
