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Morning Edition · Monday, November 2, 2026Published at 12:15 AM EST · New York
Brazil's Stock Index Loses 18% and the Real 9% in the Week After Lula's Re-Election
Lula has pledged to keep every social program in his 2027-2030 term, and the leader of a key centrist party says markets will not settle until he appoints a finance team with real authority.
Brazilian assets fell sharply in the week after President Luiz Inácio Lula da Silva won a fourth term. The Ibovespa fell 18.12% over the week after the runoff and closed Friday at 167,921.80, its largest weekly loss since March 2020, according to CNN Brasil. The dollar rose 9.15% against the real, to about R$5.44. On the first trading day after the vote, the index dropped 13% and triggered a circuit breaker, an automatic trading halt, while the dollar jumped 8%.
Folha reported that analysts see the volatility pushing investors toward protective assets and broader portfolio diversification. The selling is targeting fiscal policy, not the identity of the winner. On Sunday, according to the state agency Agência Brasil, Lula said he will not end any social program in his next government. "What can happen is that we create new social programs or improve those that already exist," he said. Lula did not say how he would pay for the programs, and investors are waiting for that answer.
Gilberto Kassab, the leader of the centrist Social Democratic Party (PSD), set his own terms. InfoMoney reported that Kassab said Lula needs to find a pair of officials like Antonio Palocci and Henrique Meirelles and give them real authority. Palocci was Lula's first finance minister, and Meirelles ran the central bank during his first term. Kassab tied any formal role for his party in the governing coalition to genuine dialogue with the political center.
The opposition is also unsettled. Senator Flávio Bolsonaro has left Brazil. US Secretary of State Marco Rubio said Washington was not directly involved in his departure, while President Trump said Bolsonaro could stay in the United States "as long as he wants."
Part of a tracked trend
Emerging-Market Elections Turn on Fiscal Credibility
In large emerging markets, polarised elections keep making fiscal rules and congressional arithmetic, rather than the identity of the winner, the main determinant of currency and local-rate pricing.
Veracity: Corroborated
78/100- If true, who benefits
If the sell-off is about fiscal policy, centrist power brokers such as Kassab gain leverage to shape the finance team, and investors gain if they extract a spending rule in exchange for calmer markets. Washington's role in Flávio Bolsonaro's departure matters mainly to the Brazilian opposition and to US-Brazil relations.
- The nuance
Brazilian analysts say the market had bet on a change of government and that the result came as a surprise, so the identity of the winner also drove the selling. Rubio's denial of direct involvement conflicts with Band's report that he arranged the departure, and 25 members of Congress have asked him to explain.
An open-source-intelligence read of how likely this story is true with its real nuance, not a judgment of any outlet. It assesses the claim, weighing independent and adversarial reporting. How we label confidence.
Synthesized from: Folha (Mercado) · Agência Brasil · InfoMoney · Buenos Aires Times
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Comments
1Nov 2, 5:15 AM
In dollar terms the Ibovespa lost roughly 25% for the week, since an 18.12% index drop combined with a 9.15% rise in the dollar leaves foreign holders with about 75% of their starting value.