Brazilian markets plunge after Lula wins presidential runoff

Brazilian markets plunged on Monday after Luiz Inácio Lula da Silva won the presidential runoff, reversing investor bets on a victory by Flávio Bolsonaro. The Ibovespa benchmark fell as much as 17.34% from Friday’s close, while the real weakened sharply against the U.S. dollar. The B3 exchange halted trading for 30 minutes after the index’s decline reached 10%. The benchmark later recovered some ground; its intraday low was not its closing level. The Superior Electoral Court reported that Lula won 51.79% of valid votes, against 48.21% for Bolsonaro, in the October 25 runoff. The result gave Lula a fourth, nonconsecutive presidential term. Investors had rallied Brazilian assets after Bolsonaro’s first-round performance, anticipating that his victory would bring tighter fiscal policy. The dollar rose to about 5.60 reais during Monday trading, compared with a Friday close near 4.99, before giving back part of its gain. Interest-rate futures also climbed, and Brazilian government bonds fell. The market moves affected equities, currency and debt as investors reassessed expectations for economic policy under Lula’s incoming administration. Investors and analysts attributed the...