Lula wins Brazil runoff with 51.78% as Bolsonaro refuses to concede and markets slump

The result

Lula won Brazil's presidential runoff, with 51.78% of valid votes after the electoral commission counted almost all ballots, against 48.21% for the right-wing senator Flávio Bolsonaro. The lead amounts to 4.4 million more votes. Addressing a large crowd on Avenida Paulista in São Paulo overnight, Lula described his victory as a miracle. He turns 81 on Tuesday, 27 October.

Lula51.78%

Flávio Bolsonaro48.21%

Lula

51.78 %

Flávio Bolsonaro

48.21 %

Data from the article text

Bolsonaro refused to concede and said he would seek annulment of the result. Parkiet reports that just before polling closed, judge Cristiano Zanin, who had previously been a lawyer for Lula, ordered voting extended by two hours, citing bus transport problems in districts that back the left. According to the same report, the decision went against the opinion of judges of the Superior Electoral Court. Many polling stations in districts favouring Bolsonaro closed, and their voting machines were blocked because the extension reached them too late.

Markets reprice Brazil

The iShares MSCI Brazil ETF lost nearly 20% in the night from Sunday to Monday, reacting to the announced runoff result. Investors had preferred a Bolsonaro win, a hope that had driven strong gains on the Brazilian stock market and a firmer real in the weeks before the vote. Before the election, brokerage Monte Bravo estimated the Ibovespa index could fall 11% in the first trading hour if Lula won. Societe Générale warned the real could weaken by as much as 10%, while local yields could rise by 150 to 250 basis points. A Citigroup survey of 73 investors, published on Friday, 23 October, found a majority expected a Lula win to weaken the real by at least 5% and raise swap rates by more than 1 percentage point. Bruno Funchal, chief executive of Bradesco Asset Management, said it would be a difficult day and that the market would have to reprice everything, adding that everyone had been surprised.

Relations with the United States

Folha de S.Paulo, cited by Nasz Dziennik, assesses that the biggest foreign policy challenge for Lula's fourth term will be building relations with the United States during the remaining two years of Donald Trump's presidency. Lula campaigned on defending Brazil's sovereignty and sharply criticised the current US administration's policy towards Latin America, while Trump has repeatedly spoken critically of him. US tariffs of 37.5% on Brazilian goods remain one of the main problems. According to the newspaper's sources, the Trump administration has signalled it could resume trade negotiations after the election. Brasília plans to pair defence of national interests with continued dialogue, and wants US investment in processing critical minerals, including rare earths, instead of exporting raw materials. Lula also intends to keep close economic ties with China, Brazil's largest trading partner, despite the rivalry between Beijing and Washington.

What comes next

Bolsonaro has said he will seek annulment of the result, and the reports do not give a timetable for that challenge. The first trading session after the result showed the sharpest market move of the week, while the Folha assessment points to trade talks with Washington as the next test for the government.