Brazil's real strengthens to 4.98 per dollar and the Ibovespa jumps 8% after the first-round vote
Serguey Asael Shinder1 min readBrazilian markets moved sharply on Monday 5 October after the first round of the presidential election, Euronews reports.
The vote. Flávio Bolsonaro of the Liberal Party, son of former president Jair Bolsonaro, won more than 56 million votes, or 47.03%, against almost 53.9 million, or 45.16%, for President Luiz Inácio Lula da Silva. Neither reached the majority needed to win outright, so the two meet in a runoff on 25 October.
The market reaction. The Ibovespa, the main index of the B3 exchange in São Paulo, opened at a record and recorded an 8% jump, after closing 2.46% higher on Friday. The real strengthened during the day to 4.98 per US dollar, from 5.22 at Friday's close, a move of about 4.6%.
What markets are pricing. According to specialists cited by Euronews, the rally reflects the unexpectedly wide margin of Bolsonaro's lead, which raises the chances of a victory seen as bringing a new fiscal and economic outlook. His platform includes scrapping taxes, measures to rein in public debt and privatising dozens of state-owned companies. Analysts at BTG Pactual estimate that a Bolsonaro victory on 25 October could lift shares on B3 by as much as 45%.
The other side. Euronews notes that inflation has been brought under control and unemployment has reached a historic low during Lula's third term, while Brazilians complain about lost purchasing power.