Brazil markets plunge after Lula's reelection win

Brazilian markets plunged Monday after leftist Luiz Inacio Lula da Silva won reelection, surprising investors who expected conservative Flavio Bolsonaro to prevail and feared Lula's spending promises could undermine fiscal discipline. Sao Paulo's Ibovespa index fell nearly 14 percent, triggering a trading halt for the first time since 2020, while the real dropped eight percent against the dollar. Lula won 52 percent of the runoff vote, defeating Bolsonaro, who had pledged spending cuts but offered no specifics. Brazil faces high public debt exceeding 80 percent of GDP and interest rates at 13.75 percent. Lula's costly campaign pledges, including increased cash transfers and debt forgiveness, worry markets, though conservative congressional gains may constrain spending. Bolsonaro has refused to concede, citing voting extensions.