Brazilian assets rallied sharply after first-round election results showed Flávio Bolsonaro advancing to an Oct. 25 run-off against incumbent President Luiz Inácio Lula da Silva with a stronger-than-expected showing. Speculators on prediction market platform Kalshi now give Bolsonaro a more than 80% chance of winning the presidency, up from about 60% before Sunday's first round, while on Polymarket his odds jumped to 85% from 63%. Bolsonaro secured more than 47% of the votes and beat Lula's first round total by nearly 2 percentage points, despite pre-election polls that widely expected him to trail the incumbent in that initial tally. The iShares MSCI Brazil ETF was up more than 12% on Monday, U.S.-listed shares of Itau Unibanco gained 15%, Banco Bradesco surged 19%, and Brazil's local Bovespa index was up 8%. Investors broadly see Bolsonaro as more favorable to markets, as the candidate is promising greater fiscal discipline, with Brazil's deficit-to-GDP ratio at almost 10% in June.
Banco Bradesco SA ADRBradesco surged 19% as Bolsonaro's stronger-than-expected first-round showing and rising run-off odds boost Brazilian assets seen as market-friendly.
Itau Unibanco Banco Holding SAItau Unibanco ADRs gained 15% as Bolsonaro's advance to the run-off with stronger-than-expected support lifted Brazilian financial assets.
