--- title: "Brazilian Stocks Rally 14%, Eye Best Day Since 2020 After Bolsonaro's First-Round Victory" type: "News" locale: "en" url: "https://longbridge.com/en/news/300945278.md" description: "Brazilian stocks surged, with the iShares MSCI Brazil ETF jumping over 14% and the Ibovespa index rising 9%, marking their best performance since 2020. This rally followed right-wing Senator Flávio Bolsonaro leading President Lula in the first round of the presidential election. Investors anticipate a potential shift toward fiscal discipline and improved credit ratings under a Bolsonaro administration, driving gains across domestic financials and broader Latin American markets ahead of the Oct. 25 runoff." datetime: "2026-10-05T14:17:42.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/300945278.md) - [en](https://longbridge.com/en/news/300945278.md) - [zh-HK](https://longbridge.com/zh-HK/news/300945278.md) generator: "portal-rs" --- # Brazilian Stocks Rally 14%, Eye Best Day Since 2020 After Bolsonaro's First-Round Victory Brazil has not yet elected a new president, but the **iShares MSCI Brazil ETF** (NYSE:EWZ) is trading as if it has. The exchange-traded fund jumped more than 14% in early trading on Monday, after right-wing Senator **Flávio Bolsonaro** finished ahead of President **Luiz Inácio Lula da Silva** in Sunday’s first round. If the gain holds through the close, it will be EWZ’s best day since March 13, 2020. In São Paulo, Brazil’s main stock index, the Ibovespa, rose 9%, setting a fresh record high. Bolsonaro’s margin was less than 2 percentage points, and the decisive runoff is not until Oct. 25. So why are investors pricing the result three weeks early? ## **What Happened On Sunday** Senator **Flávio Bolsonaro** — the son of former Brazilian President **Jair Bolsonaro** — took 47.03% of valid votes. Lula took 45.16%, with the Superior Electoral Court (TSE), Brazil’s electoral authority, counting 99.99% of polling stations. Neither candidate passed 50%, so the two meet again in a runoff on Oct. 25. The result ran counter to the final polls. Private surveys had shown Lula ahead by about 3 points in the first round. The comparison with 2022 shows how far the race has moved. Back then, Lula won the first round with 48.43% against 43.20% for **Jair Bolsonaro**, Flávio’s father. **Gustavo Medeiros**, head of research at emerging-markets manager Ashmore Group, put the swing in numbers. “Flávio Bolsonaro took 47.0% of valid votes against Lula’s 45.2%, improving on his father’s 2022 result by 3.8 points, while Lula fell 3.2 points,” Medeiros said in a Monday note. He also ruled out low turnout as the explanation. Abstention reached 21%, about two points above its historical average. The Oct. 25 runoff is not a foregone conclusion, but the arithmetic favors Flávio, he said. ## Companies With Domestic Credit, Interest Rate Exposure Rally The **iShares MSCI Brazil Small-Cap ETF** (NASDAQ:EWZS) rose 15.4%, more than the large-cap fund. | Company | Change at open | | ------------------------------------------ | -------------- | | **XP Inc.** (NASDAQ:XP) | +27.0% | | **PagSeguro Digital Ltd.** (NYSE:PAGS) | +19.4% | | **StoneCo Ltd.** (NASDAQ:STNE) | +18.4% | | **Sabesp** (NYSE:SBS) | +16.7% | | **Banco Bradesco S.A.** (NYSE:BBD) | +16.2% | | **Itaú Unibanco Holding S.A.** (NYSE:ITUB) | +15.9% | | **Nu Holdings Ltd.** (NYSE:NU) | +12.9% | | **Petrobras** (NYSE:PBR) | +9.6% | | **Vale S.A.** (NYSE:VALE) | +6.5% | The rally spilled over to other Latin American stocks listed in New York. **MercadoLibre Inc.** (NASDAQ:MELI), which generates its largest share of revenue in Brazil, rose 8.1%. Payments company **DLocal Ltd.** (NASDAQ:DLO) gained 6.8%. Argentine banks also moved higher, with **Grupo Financiero Galicia S.A.** (NASDAQ:GGAL) up 4.8% and **Banco Macro S.A.** (NYSE:BMA) up 4.3%. The **iShares Latin America 40 ETF** (NYSE:ILF), where Brazil carries the largest weight, climbed 7.8%. **Read Also: Earnings Volatility Watch: A Gold Miner Is Priced to Swing the Most This Week** ## The Fiscal Question Behind The Move Brazil’s public debt is the reason the election matters so much to markets. Medeiros said gross debt stands at about 82% of gross domestic product (GDP), the total value of what the economy produces in a year. “Anchoring fiscal policy on debt, with spending frozen while gross debt exceeds 65% of GDP (it is about 82% today), alongside an adjustment of around 1.5% of GDP within 18 months, would be a credible break with the past,” he said. If delivered, he added, it could put Brazil back on the path to investment grade, the credit rating that marks a borrower as low-risk, within four to six years. **Andrés Abadía**, chief Latin America economist at Pantheon Macroeconomics, expects “another extremely tight race.” Bolsonaro remains the slight favorite, he explained, noting that most votes for eliminated candidates went to center- and right-leaning candidates. That gives Bolsonaro a larger pool to draw from on Oct. 25. Abadía also warned that the rally needs fiscal follow-through. “Brazil’s next president will inherit rising mandatory spending, high debt-servicing costs and limited budget flexibility,” he added. “Sustaining any initial rally will require a credible plan for the public finances.” Polymarket traders now assign an 84.5% probability to a Bolsonaro victory. Lula’s odds have fallen to 15.5%. **Read Also: 20-Year Oracle Bond Yields 8.1%: Could the Stock Match That Return?** *Image: Shutterstock* ### Related Stocks - [BBD.US](https://longbridge.com/en/quote/BBD.US.md) - [BMA.US](https://longbridge.com/en/quote/BMA.US.md) - [DLO.US](https://longbridge.com/en/quote/DLO.US.md) - [GGAL.US](https://longbridge.com/en/quote/GGAL.US.md) - [ITUB.US](https://longbridge.com/en/quote/ITUB.US.md) - [MELI.US](https://longbridge.com/en/quote/MELI.US.md) - [NU.US](https://longbridge.com/en/quote/NU.US.md) - [PAGS.US](https://longbridge.com/en/quote/PAGS.US.md) - [PBR.US](https://longbridge.com/en/quote/PBR.US.md) - [SBS.US](https://longbridge.com/en/quote/SBS.US.md) - [STNE.US](https://longbridge.com/en/quote/STNE.US.md) - [VALE.US](https://longbridge.com/en/quote/VALE.US.md) - [XP.US](https://longbridge.com/en/quote/XP.US.md) - [EWZ.US](https://longbridge.com/en/quote/EWZ.US.md) - [EWZS.US](https://longbridge.com/en/quote/EWZS.US.md) - [ILF.US](https://longbridge.com/en/quote/ILF.US.md) ## Related News & Research - [PagSeguro director Alexandre Magnani disposes of shares worth $3.68 million](https://longbridge.com/en/news/301743912.md) - [LIVE MARKETS-BRAZIL ETF SOARS AFTER PRESIDENTIAL VOTE](https://longbridge.com/en/news/300921846.md) - [Banco Bradesco (NYSE:BBD) Stock Sees Heavy Put Option Buying](https://longbridge.com/en/news/301163840.md) - [Major Insider Move Signals Bold Confidence in Leading Brazilian Bank](https://longbridge.com/en/news/301451788.md) - [Banco Bradesco SA (NYSE:BBD) Receives Consensus Recommendation of "Moderate Buy" from Analysts](https://longbridge.com/en/news/301274562.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**