Brazil Markets Crater, some Stocks Sink 50% After Lula's Victory
Investors dumped Brazilian assets as fears grew that Lula will keep expansionary spending and leave a budget gap above 9% of GDP, traders said.
- On Monday, Brazilian markets tumbled as investors abandoned bullish wagers following President Luiz's reelection; The Ibovespa Index fell 17% at one point after triggering a circuit breaker at the open.
- Investors had actively bid up Brazilian assets in recent weeks, betting on a victory for Bolsonaro, who promised to slash the deficit; his loss exposed concerns over a budget gap exceeding 9% of the economy.
- The magnitude of the selloff triggered multiple trading halts, with some shares losing more than 50% of their value; an exchange-traded fund tracking Brazilian stocks slumped as much as 26% in New York.
- JPMorgan downgraded Brazil's currency and rates to market-weight, while Bradesco BBI lowered its outlook for the nation's stocks; traders pushed swap rates higher Monday, sending some contracts up more than three percentage points.
- Strategist Alvaro Vivanco expects enough fiscal steps to contain risks, calling the situation "concerning," while Ales Koutny, head of international rates at Vanguard, warned the result suggests a continuation of current policies.
15 Articles
15 Articles
After Lula's surprising election victory in Brazil, there is uncertainty. Political divisions and economic turbulence shape the new beginning.
Brazil Markets Crater, Some Stocks Sink 50% After Lula Victory
Reset epochal on Bolsonaro that does not fit and asks for the annulment of the vote (ANSA)
The historic election victory of Lula da Silva breaks down the Brazilian currency, also because the success has several blemishes.
Investors settle positions this Monday after the turn of President Luiz Inácio Lula da Silva's (PT). The strong recalcification of assets takes nine shares of Ibovespa back more than 40% in the session, among them retail companies and the real estate market, strongly affected by the trajectory of interest. At the same time, these roles achieved significant gains in recent weeks, when the market evaluated that a victory of Flávio Bolsonaro (PL) w…
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