Brazilian shares plunge as Lula wins presidency

U.S.-listed Brazilian shares plunged in premarket trading Monday after Luiz Inácio Lula da Silva's surprise election win, with the iShares MSCI Brazil ETF falling over 27% and Petrobras dropping roughly 22%. Markets had positioned for a Jair Bolsonaro victory, betting on economic reforms amid Brazil's deteriorating public finances and high interest rates. Banking stocks were hit hard, with Itaú Unibanco, Banco Bradesco, and Nu down between 23% and 29%, while MercadoLibre fell 10.9% and Ambev slumped around 18%. Lula faces the challenge of slowing Brazil's debt growth, which exceeds 82% of GDP, while preserving social programs. His team targets a primary budget surplus of 1.3% of GDP by 2030, but mandatory spending limits room for cuts, raising concerns about borrowing costs.