Lula Wins a Fourth Term: Ibovespa Futures Fall Nearly 20% and B3 Halts Trading at the Open

Brazil re-elected Luiz Inácio Lula da Silva on Sunday, and on Monday morning its markets did what a market does when it has been positioned for the other result. By 9:36 in Brasília the December Ibovespa futures contract had fallen as much as 19.85%, its low of the morning, after the exchange had widened its daily limit twice; at 9:52 it was down 17.73%. The Central Bank’s opening dollar fixing came in at R$5.6052, 11.3% above Friday’s. Long interest-rate futures were stuck at their upper limits, and when the stock market was due to open at 10:00, B3 suspended trading for 30 minutes. The Brazil ETF listed in New York was about a quarter lower before the US open.

Market data as of 10:20 Brasília time (13:20 UTC) on 26 October 2026. Figures will move through the session; this article will be updated after the close.

None of this is a verdict on Lula’s fourth term, which starts on 5 January 2027. It is the price of a bet unwinding: three weeks ago Flávio Bolsonaro finished first in the opening round, and Brazilian assets rallied on the expectation of a fiscal turn. This article sets out what the numbers show at the open, what the market had priced, and what would have to happen for the move to reverse. Figures are a snapshot taken between 9:00 and 10:20 in Brasília (12:00–13:20 UTC) on Monday, 26 October 2026, and they will be out of date within hours. Nothing here is a buy or sell signal.

The result

With 100% of polling stations counted, Brazil’s Superior Electoral Court (TSE) gives:

Blank ballots were 1.12% of votes cast and spoiled ballots 2.12%. In the first round, on 4 October, Flávio Bolsonaro had led with 47.03% against Lula’s 45.16%. The final poll from Quaest, published on Saturday, had Bolsonaro at 51% of valid votes.

There is one open political question. Flávio Bolsonaro said on Sunday night that he would ask for the election to be annulled, arguing that a Supreme Court order by Justice Cristiano Zanin, which extended voting until 19:00, changed the rules during the vote. The extension was requested by Lula’s coalition; Bolsonaro’s campaign had itself asked the TSE for more time in some states because of heavy rain (Senado Notícias). A g1 count of TSE data, reported by Valor, puts the votes registered after 17:00 at about 35,000, against a margin of 4.4 million. Legal analysts quoted by BBC Brasil see the chance of annulment as remote. For markets the challenge matters less as a legal risk than as a source of noise in the weeks when investors want fiscal signals.

The scoreboard at the open

Sources: futures, the cash-market halt and the 9:47 dollar from InfoMoney’s live coverage, InfoMoney and Valor; Friday’s closes from Estadão; PTAX from the Banco Central do Brasil; DI rates from Valor; EWZ from InfoMoney (5:34) and Yahoo Finance’s premarket quote (10:11). *The previous settlement is our calculation: both reported Monday prints imply about 208,100.

Three details matter for reading the table:

• The futures fall is measured against the futures’ own settlement, not against the cash index. The December contract trades above the cash Ibovespa because it carries roughly two months of interest. Applied to Friday’s cash close, a 19.85% fall points to about 164,400.
• The futures could not fall further than they did. B3 widened the daily lower limit on Ibovespa futures from −10% to −15% before the 9:00 open, and to −20% shortly after (a notice issued around 9:12 and effective from 9:30; B3 notice, via Jornal do Comércio). The first print, −14.84% at 177,215 at 9:05, was just above the first new floor; trading then stalled and the contract went to auction. The dollar futures’ upper limit went from 6% to 8.4% and then, at 9:40, to 12%; DI limits were raised too.
• Thin trading. The November dollar contract was up 9.16% at R$5.430 on only 610 contracts early in the session (CNN Brasil). Opening prints on a day like this are a price for the few who trade, not a consensus.

The cash market’s circuit breaker is separate from the futures limits. Trading on B3’s equity market stops for 30 minutes if the Ibovespa falls 10% from Friday’s close (about 184,600), for an hour at 15% (about 174,300), and for a period set by B3 at 20% (about 164,100). Before today it was last triggered in March 2020. On Monday B3 announced at 10:03 that trading was suspended for 30 minutes, and at 10:11 that it would set the reopening time shortly; ten minutes after the scheduled open the Ibovespa had not printed a level (InfoMoney). At the time of writing we cannot give the cash index’s first level or how far it fell.

Why the fall is this large: the market had priced the other result

The move is large because the starting point was not neutral. After the first round, investors bought Brazil on the expectation that a Bolsonaro government would tighten fiscal policy and let interest rates fall:

• On 5 October the Ibovespa rose 7.7% to a record close, above 200,000 points for the first time.
• Brazil’s five-year credit default swap fell to 108 basis points on 6 October, its lowest since February 2020 (Valor International).
• By Friday’s close, stocks were almost 7% above where they stood before the first round, and the real was nearly 5% stronger against the dollar (Reuters).

J.P. Morgan noted that betting markets had given Bolsonaro about a 75% chance before the runoff (InfoMoney).

The arithmetic of the open goes further than unwinding that rally. Before the first round the Ibovespa was near 192,000 and the dollar near R$5.22, according to Gabriel Pinheiro of GT Capital. Monday’s futures low points to a cash index roughly 14% below that level, and the dollar is about 7% above it. The numbers suggest the market is not only removing the Bolsonaro premium, but also adding a discount for a fourth Lula term whose fiscal plan is not yet specified. Whether that discount survives the first fiscal announcements is the real question for the coming weeks.

The rate curve is the centre of the move

For Brazil, the interest-rate curve matters more than the stock index, because it sets the cost of the public debt and of credit. Around 9:50, according to Valor:

The January 2028, 2029 and 2031 contracts stopped moving once they hit B3’s limits, and the 2029 and 2031 rates sat exactly at the new limits published by B3 (UOL), so the true clearing level may be higher. The National Treasury cancelled this week’s auctions of inflation-linked (NTN-B) and fixed-rate (LTN and NTN-F) bonds and kept Tuesday’s floating-rate (LFT) offer (Valor).

The short end moved least, which is the informative part. The Selic rate is 13.75%, after a 25-basis-point cut on 16 September, the fifth cut of 2026 (Banco Central do Brasil). The Central Bank’s Focus survey, released this morning with answers collected before the result, still expected 13.25% at the end of 2026 and 11.75% at the end of 2027 (InfoMoney). The Copom meets on 3–4 November and 8–9 December. William Jackson, chief emerging markets economist at Capital Economics, said cuts at both remaining meetings this year no longer look likely, given higher fiscal risk and a weaker real (InfoMoney). Gabriel Mollo, an analyst at Daycoval Corretora, told UOL that while some forecasts still include a cut in November, a further cut in December has become more uncertain. The long end jumped by more than 2 points, which is where a market prices debt sustainability rather than the next meeting.

That debt is the context. Brazil’s general government gross debt was 82.87% of GDP in August, up from 81.95% in June, according to the Central Bank.

What Lula has promised on the economy

These are the facts that will be repriced over the coming weeks, separated from opinion:

• Fiscal rule. Lula’s platform keeps the fiscal framework approved in his third term, which caps real spending growth at up to 2.5% a year. Planning Minister Bruno Moretti presented a trajectory toward a primary surplus of 1.5% of GDP in 2030 (InfoMoney). The 2027 budget bill projects a surplus of R$18.6 billion, about 0.13% of GDP.
• A first fiscal measure is being prepared. Folha de S.Paulo reported on Sunday night that the economic team is drafting a constitutional amendment to let the government aim for the centre of the fiscal target, rather than its floor, and freeze more spending if revenue falls short. It also plans less subsidised credit. Sending it depends on Lula and on who runs the economic ministries.
• Campaign commitments pointing the other way. In the runoff campaign Lula promised debt forgiveness for micro-entrepreneurs, a higher Bolsa Família payment and free public transport at weekends and on public holidays (Folha, InfoMoney). The team says they will be accommodated in the 2027 budget.
• The finance ministry. The current minister is Dario Durigan, who replaced Fernando Haddad in March. Folha lists Central Bank governor Gabriel Galípolo, Durigan, and senators Camilo Santana and Renan Filho as candidates; O Globo also mentions Moretti and Vice President Geraldo Alckmin. No name has been announced. In his victory speech Lula did not address fiscal policy (O Globo).

Analysts quoted on Monday are consistent on what would change the price. Alejo Czerwonko, chief investment officer for emerging markets at UBS Global Wealth Management, told Reuters that investors want “a clear and credible commitment to fiscal discipline” and expect sentiment to stay weak “until a clear fiscal plan emerges”, including a working relationship with an opposition-leaning Congress. Divya Singaravelu of Meridian 1305 Capital said the choice of finance minister would be an early signal, and that she wants to see the 2027 budget and spending cap. Those are opinions, but they identify the next data points.

Which assets are most exposed

The early moves sort Brazilian assets by how much they depend on domestic interest rates and on the state:

These are the views of the banks concerned, not AssetWhisper’s. J.P. Morgan’s strategists expect the Ibovespa to fall about 20% in the coming days and the dollar to reach R$5.50. They still prefer exporters and companies less dependent on the domestic economy, naming Gerdau, Vale, Suzano and Embraer, and see Simpar, Natura, Amaggi, sanitation and infrastructure as more exposed (InfoMoney). The bank cut its recommendation on the real to neutral, citing the cost of holding long-dollar positions. Société Générale had flagged a fall of up to 10% for the real and a rise of 150 to 250 basis points in local yields (Bloomberg, via InfoMoney). The real’s fall already exceeds that range; long-dated rates are at or beyond the top of it. Not everyone reads the move the same way: Gavekal argued this morning for buying Brazilian assets, citing high interest rates and commodities (InfoMoney).

Behind the EWZ number there is a currency effect. A US-dollar investor in Brazilian shares loses twice on a day like this: once on the share price in reais, and again on the conversion back to dollars. With the real about 11% weaker, a 20% fall in reais would mean roughly 28–29% in dollars. EWZ’s fall of about 26% is somewhat smaller, partly because its basket (MSCI Brazil) differs from the Ibovespa futures and partly because the prices were taken at different times.

What would have to be true for the move to reverse

The 2022 election offers a reference, not a forecast. Lula also won that runoff, and the first session was positive: the Ibovespa rose 1.31% and the dollar fell 2.5%. The sell-off came in November, driven by his remarks on the spending cap, the transition-period constitutional amendment and the wait for a finance minister; on 10 November 2022 the index lost 3.35%. This time the order is reversed: the market had priced the opposite result, so the repricing came first. Four things to watch:

1. The finance minister. A name the market reads as a fiscal anchor would be the fastest signal.
2. The constitutional amendment on the fiscal target. Whether it is sent, and how Congress receives it.
3. The 2027 budget. How the campaign promises fit inside the spending cap, and how large the primary surplus is after including them.
4. The Copom on 4 November. Whether the Central Bank cuts again, pauses, or comments on the currency and the curve.

A 20% move in one session changes the weight of any single-country holding in a portfolio; our article on position sizing and the risk of ruin sets out the arithmetic.

Frequently asked questions

Who won Brazil’s 2026 presidential election?
Luiz Inácio Lula da Silva won the runoff on 25 October 2026 with 51.79% of valid votes, against 48.21% for Flávio Bolsonaro, according to the TSE with 100% of polling stations counted. It is Lula’s fourth term; it begins on 5 January 2027.

How much did Ibovespa futures fall after Lula’s win?
The December 2026 contract fell 14.84% to 177,215 points at 9:05 in Brasília and 19.85% to 166,790 at about 9:36, after B3 widened its daily lower limit first to 15% and then to 20%; at 9:52 it was down 17.73%. The fall is measured against the contract’s previous settlement, which is higher than the cash index.

Why did the market fall so much if Lula was already president?
Because investors had positioned for a Bolsonaro win after the first round, when the Ibovespa rose 7.7% in one day and Brazil’s five-year CDS fell to 108 basis points. Monday’s move is the reversal of that position plus a discount for fiscal uncertainty, since the new term’s fiscal plan and economic team have not yet been announced.

Was there a circuit breaker on Monday?
Yes. B3 suspended trading on its equity market for 30 minutes at the 10:00 open. The rule halts trading when the Ibovespa falls 10% from the previous close (30 minutes), 15% (one hour) or 20% (a period set by B3); before Monday it was last triggered in March 2020. Futures have separate daily price limits, which B3 widened twice on Monday.

What happens to the Selic rate now?
The Selic is 13.75%. The Focus survey released this morning, collected before the result, expected 13.25% by the end of 2026. Several economists now see fewer cuts as likely. The next Copom decisions are on 4 November and 9 December.

Can the election be annulled?
Flávio Bolsonaro said he will ask for it, citing a Supreme Court order that extended voting hours, which Lula’s coalition had requested. About 35,000 votes were registered after 17:00, against a margin of 4.4 million, and analysts quoted by BBC Brasil consider annulment remote.

Related reading

• How Milei rebuilt Argentina’s economy — the neighbouring case of a market repricing a fiscal regime.
• Why bond yields rise when central banks cut rates — the gap between the short and the long end.
• The 2026 US midterms and markets — what elections usually change in a portfolio, and what they don’t.
• Bear markets since 1950 — how deep and how long.
• Portfolio hedging strategies — what protection costs before an event like this one.

This article is general information, not personalised investment advice. It does not take into account the financial situation, objectives or risk tolerance of any individual reader, and the same text is distributed to all readers. Market data are a snapshot taken between 9:00 and 10:20 in Brasília (12:00–13:20 UTC) on 26 October 2026, from the TSE, Banco Central do Brasil, B3 notices as reported by the press, Reuters, Bloomberg, Valor Econômico, InfoMoney, Folha de S.Paulo, CNN Brasil, UOL and Yahoo Finance; prices on a day like this move by several percent within minutes, and opening prints in thin markets may differ between sources. Single-country emerging market exposure carries currency, political and liquidity risks that broad indices do not. Past performance does not indicate future results. Capital is at risk.