Brazil's stock market halts trading in first circuit breaker since 2020 as post-election rout deepens
The Bovespa fell 10% minutes after the open, setting off an automatic 30-minute suspension as the selloff that followed Lula's fourth-term win went global.
Brazil's stock exchange triggered its circuit breaker minutes after Monday's open, halting trading for the first time since March 2020, when the pandemic shook global markets. The Ibovespa fell 10% from Friday's close at the open, setting off an automatic 30-minute suspension, after index futures had dropped nearly 15% before the bell. Exchange operator B3 widened the daily lower limit on Ibovespa futures from 10% to 15%, and then to 20% after the open.
The halt extends the rout that followed President Luiz Inácio Lula da Silva's surprise fourth-term victory over Flávio Bolsonaro in Sunday's runoff. Markets had positioned for a Bolsonaro win after he led the first round against pollsters' expectations, and the unwinding of those bets has swept Brazilian assets worldwide: the iShares MSCI Brazil ETF fell about 27% in U.S. pre-open trading, Petrobras dropped about 22%, and lenders Itaú Unibanco, Banco Bradesco and Nu fell between 23% and 29%. Brazil's real slid toward 4.98 per dollar. Bolsonaro has rejected the result and called for the vote to be annulled. Under B3's rules, a further slide to 15% would trigger a one-hour halt, and a 20% drop would suspend trading for a period the exchange sets.
Investors are now focused on fiscal policy in Lula's fourth term. "The main focus for investors will be the conduct of fiscal policy," Gabriel Mollo, an analyst at Daycoval Corretora, told Reuters, citing the public-debt trajectory, spending control and the credibility of fiscal targets as decisive for confidence. The composition of Lula's economic team will be watched closely. Earlier: Brazilian assets plunge in U.S. premarket trading, and this morning's Toast & Tickers.
