Lula's victory brings down Ibovespa, skyrockets the dollar and leads Citi to recommend the sale of Banco do Brasil
Index has the worst week since 2020, EWZ drops almost 30% and the dollar accumulates an increase of 9% after Lula's re-election.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM MONEY TIMES · 3 MIN
The re-election of Lula (PT) on Sunday (25) was received with a sharp drop in the market. On Monday (26), the first trading session after the vote, the Ibovespa fell by up to 17% during the day and closed down 13.88%, according to Seu Dinheiro. According to O Antagonista, B3 activated the circuit breaker at the beginning of the trading session.
The movement ended a difficult week for Brazilian assets. According to Gazeta do Povo, the Ibovespa had the biggest weekly drop since the pandemic, while Seu Dinheiro classifies the week as the worst since 2020. Abroad, the EWZ, an ETF that tracks Brazilian shares traded in New York, fell almost 30%, and the ADRs of companies in the country also fell, according to the Money Times.
The exchange rate followed the same direction. The dollar accumulated an increase of 9% in the week and reached the highest price of 2026, according to Gazeta do Povo. For those who keep resources in reais, the appreciation of the American currency is one of the most visible signs of investors' changing mood.
The election also had other developments. Flávio Bolsonaro (PL), senator, was defeated in the presidential race. In the fiscal field, O Antagonista reports that Ellery points to a risk for public accounts after the election, an issue that usually weighs on interest rates and exchange rates. In the tax reform, the CBS rate was set at 11.3%, according to Money Times.
In the financial sector, Citi recommended the sale of BBAS3, a Banco do Brasil share, and maintains negative outlooks for the bank, according to Money Times. The recommendation comes at a time when the market is reviewing its bets on the next economic cycle.
What changes for the investor
The episode shows that the price of Brazilian assets began to reflect more uncertainty about fiscal policy and the direction of the economy in the coming years. For those who invest in the stock market, interest rates and the dollar, volatility and the activation of the circuit breaker reinforce the importance of monitoring signals from public accounts and the individual performance of each company, especially banks, a topic highlighted by Citi. This analysis does not indicate future prices or suggest the purchase or sale of any asset.
Automatically translated from Portuguese.
