Lula defeats Bolsonaro in Brazil runoff, defying prediction markets

Luiz Inácio Lula da Silva won Brazil's presidential runoff election on Sunday, defeating Flávio Bolsonaro by 51.8% to 48.2%, an outcome that prediction markets had failed to anticipate. Prediction markets like Kalshi and Polymarket had given Bolsonaro over an 80% chance of victory, with Lula's odds at just 21% on Kalshi late Sunday, while traditional political polls showed a tight race. Bolsonaro is expected to challenge the result, and Brazil's Supreme Court extended voting by two hours, which he argued hurt his chances. Following Lula's win, Brazil-linked stocks and ETFs fell sharply on Monday, with the iShares MSCI Brazil ETF dropping 22% and shares of Banco Bradesco tanking nearly 30%. Kalshi CEO Tarek Mansour previously defended such markets, noting that low-probability outcomes can still occur.