Brazilian Markets Plunge 17% After Lula Re-Election, Triggering Circuit Breaker

Brazilian financial markets plunged after Luiz Inacio Lula da Silva's re-election as president was confirmed, with stocks crashing 17% and triggering a circuit breaker for the first time in six years and seven months. The selloff was driven by concerns over increased fiscal spending and rising national debt. The Bovespa index fell 17.00% to 169,893 points at the open, while the real weakened 10.26% against the dollar to 5.498. Government bond yields surged, prompting the finance ministry to cancel fixed-rate and inflation-linked bond auctions. Credit default swap premiums jumped 22%, reflecting heightened default risk. The market reaction reversed gains seen after the first-round vote, when fiscal austerity expectations boosted stocks. JPMorgan downgraded its stance on Brazilian assets to neutral, while analysts warned that continued spending policies could pressure interest rates and increase debt-to-GDP ratios.