Brazilian ET F tracking Brazilian equities plunged 27% in US premarket trading, while major banks like Banco Bradesco (down 27%) and Itau Unibanco (28% lower) faltered. Wealth manager XP dropped 39%. Currency derivatives showed a more than 10% plunge in the real.
The October 4 presidential election sent surprise waves through markets. Bolsonaro won the first round, sparking a rally as foreign investors poured billions into Brazil expecting fiscal tightening that would lower interest rates. Institutions including UBS Global Wealth Management, Morgan Stanley, JPMorgan Chase, and Citigroup had issued bullish views on Brazilian assets.
Despite the initial optimism, Lula ultimately won the election, halting the right-wing surge. Bruno Funchal of Bradesco Asset Management noted, "It's going to be a tough day. The market will reprice everything.
Everyone was caught by surprise." The Fed, ECB, and BOJ will keep rates steady as they wait for further developments. A busy earnings week ahead features Verizon, Coca-Cola, Boeing, UPS, Alphabet, Microsoft, Amazon, Intel, and other companies.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing