Brazil's Ibovespa remains fragile as fiscal concerns persist after Lula's reelection rout

Brazil's Ibovespa stock index fell 0.82% on Tuesday, a day after plunging 13.88%—its steepest drop since 2020—following President Luiz Inácio Lula da Silva's reelection, which triggered a market circuit breaker. The Monday selloff erased R$734 billion in market value, driven by investor expectations of a victory for Senator Flávio Bolsonaro and a more market-friendly fiscal agenda. Analysts attribute part of the decline to rapid position unwinding rather than fundamental deterioration, though fiscal credibility concerns persist. Finance Minister Dario Durigan said the government has measures ready, including targeting the fiscal goal's midpoint. Bank stocks saw mixed trading after Citi downgraded Banco do Brasil and Bradesco, while some beaten-down shares like Magazine Luiza rebounded.