Brazil-Exposed European Stocks Fall After Lula's Surprise Election Victory

Shares in Brazil-exposed European companies tumbled after leftist incumbent Luiz Inacio Lula da Silva defeated right-wing contender Flavio Bolsonaro in Sunday's presidential election, a result investors had not expected. Santander fell nearly 4% and Telefonica dropped 7.2% in early Monday trade, while AB InBev slid 3.5%. Spain's IBEX 35 lost 0.3% and Portugal's PSI 20 fell 0.7%, even as other European indexes rose. The iShares MSCI Brazil ETF was on track for its worst one-day fall since at least 2000, down more than 27% in premarket trade. Bolsonaro had been widely expected to win on promises of fiscal consolidation, privatization and pro-business reforms. "Lula is perceived as the less market friendly candidate due to fiscal indiscipline," RBC Capital Markets' Benjamin Toms said. Brazil is Santander's second-largest market, contributing about 15% of earnings in 2025, while Telefonica's Vivo unit generated 28% of company revenue.