Brazil's Ibovespa Drops 18% as Investors Reassess Fiscal Risks

Brazil's Ibovespa index fell over 18% in the week following President Luiz Inácio Lula da Silva's reelection, as investors reassessed fiscal risks. The drop triggered a circuit breaker on Monday, with the index losing nearly 14% in a single session. The selloff, accompanied by a stronger dollar and surging futures rates, erased about R$963 billion in market value from B3-listed companies between October 23 and 30. Retail, real estate, banks, and small caps suffered the most, while commodity exporters like Petrobras and Vale cushioned the decline. Investors now await signals on the new Finance Minister, the Central Bank's interest rate decision, and geopolitical tensions involving the US and Iran. Analysts say a rate hold could calm markets, while a cut might be seen as negative given inflation and fiscal concerns.