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Brazil Assets Set to Outperform as Lula, Bolsonaro Go to Runoff

  • Lula trailing expectations may force him to seek middle ground
  • Bolsonaro’s support shows incumbent still has a chance to win
Supporters of Luiz Inacio Lula da Silva react during the first round presidential election in Rio de Janeiro on Oct. 2.

Supporters of Luiz Inacio Lula da Silva react during the first round presidential election in Rio de Janeiro on Oct. 2.

Photographer: Pedro Prado/Bloomberg
Updated on

Brazilian assets outperformed on Monday after investors welcomed the closer-than-forecast results of the first round of presidential voting.

The real was up as much as 5% against the dollar, the biggest one-day jump in more than four years, while swap rates fell throughout the curve, with long-end contracts down falling as much as 33 basis points. The benchmark Ibovespa equity index rallied 5.5% for its best session since April 2020. The nation’s sovereign dollar bonds and five-year credit default swaps were among the best performers in emerging markets.