By Brazil Stock Guide — Brazilian assets surged in overseas trading early Monday, pointing to a sharply higher opening in São Paulo after Flávio Bolsonaro finished the first round of Brazil’s presidential election ahead of President Luiz Inácio Lula da Silva.
Petrobras ADRs jumped about 11% in New York pre-market trading. Itaú and Bradesco rose by roughly 12% at one point, while Nubank gained more than 10% and XP advanced about 15%. Vale was up around 6%.
The iShares MSCI Brazil ETF, known by its ticker EWZ and widely used by international investors as a proxy for Brazilian equities, rose as much as nearly 12%.
The rally puts a major milestone within reach for Brazil’s stock market. The Ibovespa, the country’s benchmark equity index, closed Friday at 192,114 points after gaining 2.63%. A rise of just over 4% would take the index above 200,000 points for the first time.
The currency market was also pricing in a sharp reduction in Brazil’s risk premium.
Offshore trading in the Brazilian real pointed to a stronger currency, with an implied exchange rate near R$5.02 per dollar, compared with R$5.216 at Friday’s close.
The moves followed a stronger-than-expected showing by Bolsonaro, who won 47.03% of valid votes, compared with 45.16% for Lula. The two candidates will face each other in a runoff on Oct. 25.
The result was considerably stronger for the right than most polls had suggested in the final stretch of the campaign. Conservative parties also made substantial gains in Congress, reinforcing the market’s initial reaction.
Bolsonaro’s Liberal Party, or PL, emerged with the largest caucus in the lower house, electing 120 deputies. It is also set to hold 28 of the Senate’s 81 seats from 2027.
For investors, that congressional shift may matter almost as much as the presidential result. A stronger center-right and conservative presence in Congress could give a potential Bolsonaro administration more room to pursue fiscal adjustment, spending restraint, privatizations and other market-oriented reforms. It could also reduce the political cost of passing economic legislation.
Analysts said the initial repricing could translate into gains of around 7% to 8% for Brazilian equities and a 4% to 5% appreciation of the real.
Petrobras is one of the clearest signs that Monday’s rally is being driven by domestic politics rather than by commodities. Shares of the state-controlled oil producer were surging even as international crude prices traded lower, suggesting investors were reducing the discount attached to political interference, fuel-pricing policy and capital allocation.
Brazilian banks and fintechs were also among the strongest performers, reflecting expectations that lower political and fiscal risk could support the currency, compress interest-rate premiums and improve the broader outlook for domestic assets.
The next test will come when local futures markets open in Brazil. Moves in the real and in domestic interest-rate futures will help show whether investors are treating Monday’s surge as a short-lived election rally or as the beginning of a broader repricing of Brazilian assets.
For now, the message from overseas markets is clear: investors are paying more for Brazil — and less for its political risk.
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