Brazilian Markets Plunge After Lula's Reelection Win
Brazilian markets plunged Monday after Luiz Inacio Lula da Silva's reelection, with the Sao Paulo stock exchange suspending trading for 30 minutes after a 10% drop and the real depreciating over 10% against the dollar. Investors had bet heavily on Flavio Bolsonaro's victory, which failed to materialize, forcing rapid unwinding of positions. Bank stocks led losses, with Bradesco down 28.62% and Itau down 21.15% on Wall Street, while JPMorgan warned the Bovespa could fall 20% further. The selloff reflects fears over fiscal deterioration, with Brazil's gross debt above 82% of GDP. JPMorgan downgraded the real and Brazilian sovereign bonds, though Gavekal Research suggested the dip could offer buying opportunities for long-term investors.