Brazilian markets plunge after Lula's re-election victory

Brazilian markets signaled a sharp negative opening after President Luiz Inácio Lula da Silva's re-election victory, with the future dollar surging to R$ 5.58 and the Ibovespa ETF falling 27% in international trading. The dollar contract in Chicago dropped 10.44% against the real, reaching R$ 5.5846, an 11.9% variation from Friday's close. Analysts attribute the move to the unexpected result, as polls favored Flávio Bolsonaro, and to concerns over a Supreme Court decision extending voting hours, raising questions about legal predictability. Analysts expect a week of high volatility as investors reassess Brazil's risk premium amid fiscal and institutional uncertainty. Suno Research projects economic growth of 1.3% in 2027 but sees more persistent inflation, limiting Selic rate cuts, with the dollar staying near R$ 5.40. Some investors view the correction as a buying opportunity, citing Brazil's high interest rates and commodity exposure.