Skip to content
Newsheir
Business

Brazil's stocks suffer worst week since 2020 after Lula wins a fourth term

Investors who had bet on a change of government dumped Brazilian assets, sending the Ibovespa down about 18% and the real to its biggest weekly fall since 2008.

By Newsheir Staff, Newsroom

· 1 min read

ShareXLinkedInBlueskyEmail
In this article
  1. A surprise result
  2. Why markets fell
  3. Perspective

Brazil's stock market suffered its worst week since the early days of the Covid-19 pandemic after President Luiz Inácio Lula da Silva won a surprise fourth term, wrong-footing investors who had bet on a change of government.

The Ibovespa, Brazil's benchmark stock index, fell about 18 percent in the week to Friday, October 30, to around 167,500 points, its steepest weekly decline since March 2020. The real lost about 9 percent against the dollar, its biggest weekly fall since 2008.

A surprise result

Lula won the runoff on Sunday, October 25, with 51.79 percent of valid votes against 48.21 percent for Flávio Bolsonaro, son of the former president Jair Bolsonaro, according to Brazil's electoral court. It was an upset: Bolsonaro had led the first round 47 percent to 45 percent, and final polls had shown him ahead or close.

Flávio Bolsonaro said he could not recognise the result and would ask the courts to annul it, although his Liberal Party accepted Lula's victory the following day.

Why markets fell

Brazilian shares had rallied strongly in early October, hitting a record of 209,067 points on October 9, as investors bet that a new government would cut spending and reform public finances. Lula's win reversed those bets.

On Monday, October 26, the index plunged nearly 14 percent at the open, triggering a 30-minute circuit breaker that halted trading for the first time since the pandemic. Selling continued through the week amid concerns about public spending, debt and interest rates. Banks and consumer companies were among the hardest hit.

Perspective

Despite the rout, the Ibovespa is still slightly higher than at the end of 2025. Brazil's central bank, which has its benchmark rate at 13.75 percent, is due to announce its next decision this week, and markets will be watching for signals from Lula's economic team about spending plans for his new term, which begins on January 5, 2027.

Lula, 81, previously served as president from 2003 to 2010 and from 2023.

Sources and references

  1. 1.Ibovespa Posts Worst Week Since Pandemic — Trading Economics
  2. 2.Ibovespa cai 18% desde reeleição de Lula e tem pior semana em quase 7 anos — Exame
  3. 3.In stunning victory, Brazil's Lula wins fourth presidential term — NPR
  4. 4.Lula wins 4th term as Brazil's president, beating Flávio Bolsonaro in runoff — CBS News

AI disclosure This article was drafted with the help of AI tools and was reviewed, fact-checked and edited by our editors before publication. See our AI policy for details. How we use AI.

Spotted an error? Request a correction. Read our editorial standards.

Related coverage

Format: News