Ibovespa Plunges as Lula Victory Triggers Selloff

2026-10-26 14:14 By Isabela Couto 1 min. read

The Ibovespa plunged more than 16% to below 172,000 on Monday as Brazilian assets sold off following President Lula’s victory over Flávio Bolsonaro in the presidential runoff.

The decline reversed the optimism that had supported markets since the first round, when Bolsonaro outperformed polling estimates and finished ahead of Lula.

Investors had widely viewed a potential Bolsonaro administration as more likely to rein in public spending, considered essential to lowering interest rates.

Markets are now reassessing fiscal risks, including persistent primary budget deficits and the trajectory of public debt, as well as institutional risks surrounding the electoral process.

Losses were broad-based.

Petrobras sank 16%, Itaú dropped more than 15.5%, BB plunged over 31%, Itaúsa tumbled more than 16% and Axia retreated 19%.

In contrast, Vale surged over 8% ahead of its earnings release after the market close.

WEG gained 4% after announcing plans to acquire the PCS business of L&S Electric.



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Ibovespa Plunges as Lula Victory Triggers Broad Selloff
The Ibovespa plunged 13.7% to close at 176,906 on Monday as Brazilian assets sold off following President Lula’s victory over Flávio Bolsonaro in the presidential runoff. The decline reversed gains after the first round, when Bolsonaro outperformed polls and finished ahead of Lula. Investors had viewed a Bolsonaro administration as more likely to curb public spending, seen as key to lowering interest rates. Markets are now reassessing fiscal risks, including persistent primary deficits and rising public debt, alongside institutional uncertainty surrounding the election. Losses were broad-based: Petrobras fell 8.5%, Itaú dropped 13.2%, Bradesco sank 21.2%, Banco do Brasil plunged 27.3%, Itaúsa lost 12.1% and Axia declined 11.8%. In contrast, Vale gained 4.5% ahead of its earnings release, while WEG rose 5.1% after announcing plans to acquire L&S Electric’s PCS business.
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Ibovespa Plunges as Lula Victory Triggers Selloff
The Ibovespa plunged more than 16% to below 172,000 on Monday as Brazilian assets sold off following President Lula’s victory over Flávio Bolsonaro in the presidential runoff. The decline reversed the optimism that had supported markets since the first round, when Bolsonaro outperformed polling estimates and finished ahead of Lula. Investors had widely viewed a potential Bolsonaro administration as more likely to rein in public spending, considered essential to lowering interest rates. Markets are now reassessing fiscal risks, including persistent primary budget deficits and the trajectory of public debt, as well as institutional risks surrounding the electoral process. Losses were broad-based. Petrobras sank 16%, Itaú dropped more than 15.5%, BB plunged over 31%, Itaúsa tumbled more than 16% and Axia retreated 19%. In contrast, Vale surged over 8% ahead of its earnings release after the market close. WEG gained 4% after announcing plans to acquire the PCS business of L&S Electric.
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The Ibovespa’s opening was delayed on Monday after B3 triggered a circuit breaker as Brazilian assets plunged following President Lula’s victory over Senator Flávio Bolsonaro in the presidential runoff. The selloff reversed the optimism that had supported Brazilian assets since the first round, when Bolsonaro outperformed polling estimates and finished ahead of Lula. Markets had widely viewed a potential Bolsonaro administration as more likely to rein in public spending, which investors consider essential to lowering interest rates. Investors are now reassessing fiscal risks, including the persistence of primary budget deficits and the trajectory of public debt, as well as institutional risks related to controversies surrounding the electoral process. Meanwhile, Brazil’s National Treasury canceled the fixed-rate and inflation-linked bond auctions scheduled for Tuesday and Thursday, while maintaining Tuesday’s auction of securities linked to the benchmark Selic rate.
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