Summary:
- Ibovespa Stock Index Plunges 20%, Triggers Circuit Breaker
- Real Crashes 11% To 5.58/USD
- Brazil Markets Crater After Socialist Lula's Shock Victory; Bolsonaro Seeks To Annul Runoff
Market Shock
Brazilian assets crashed after President Luiz Inácio Lula da Silva's surprise runoff victory over Flávio Bolsonaro unraveled bullish bets across local stocks and the real. A controversial last-minute, two-hour voting extension has prompted Bolsonaro to call for the runoff to be annulled.
Math doesn’t add up
— Elon Musk (@elonmusk) October 26, 2026
"Needless to say, the outcome caught most of the market by surprise, with President Lula completing a major turnaround and winning the runoff," UBS analyst Daniel Pompiani told clients earlier this morning.
The real plunged as much as 11% this morning, while longer-dated interest-rate swap contracts surged almost 300 basis points after hitting trading limits.
Exchange operator B3 widened trading limits for currency, interest-rate, and stock futures for Monday's regular session to accommodate the volatility. Brazilian stocks last triggered a circuit breaker during the COVID crash in early 2020.
Ibovespa stock-index futures plunged 20%, prompting warnings from trading desks and triggering a circuit-breaker halt.
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