Brazil Stocks Plunge 17% as Lula's Shock Election Win Rattles Markets; Real Tumbles 12%

Brazilian markets plunged after Left-wing candidate Luiz Inácio Lula da Silva won Sunday's election, raising fears of fresh economic turmoil in South America's largest economy. The Ibovespa fell as much as 17% on Monday, triggering an automatic 30-minute circuit breaker for the first time since 2020, while the real slumped up to 12% against the dollar — its steepest drop in more than two decades. Some individual stocks fell as much as 60%. Lula, who has led Brazil since 2023 and served as president from 2003 to 2011, beat hard-Right candidate Flávio Bolsonaro, securing 51.8% of the vote to 48.2%. Investors had widely expected Bolsonaro to win. Fears now center on Lula shunning tough decisions on public spending and debt; Brazil's budget deficit exceeds 9% of the economy. Spectra Markets' Brent Donnelly said FX markets were "hit by a neutron bomb" after the "shocker" result. Agricultural commodities also came under pressure, with US-denominated sugar and arabica coffee futures falling as much as 4%, soybeans 2%, and Robusta coffee hitting a two-year low.