Brazilian Markets Poised to Rally After Bolsonaro Leads First-Round Vote

Brazilian markets are set to rally on October 5 after right-wing senator Flavio Bolsonaro outperformed polls to lead Brazil's presidential first round, positioning him for a runoff against President Luiz Inacio Lula da Silva. Bolsonaro captured 47% of votes versus Lula's roughly 45%, exceeding forecasts that had Lula ahead by about three percentage points. The Frankfurt-listed MSCI Brazil ETF jumped more than 16%, while overseas-listed shares of Itau Unibanco and Petrobras gained. Brazil's 2056 bond rose 1.4 cents to bid 93.5 cents. Analysts forecast the real, trading near 5.22 per dollar, could strengthen to 5.00, with equities rising 4% to 6% and the dollar falling 2% to 4%. Bolsonaro has pitched a pro-market agenda including tighter public spending, privatizations and lower taxes. Four years ago, Brazilian assets rallied similarly after former President Jair Bolsonaro's stronger-than-expected first-round showing against Lula.