Right-wing Brazilian Senator Flavio Bolsonaro will face leftist President Luiz Inacio Lula da Silva in a runoff of the presidential election later this month, after he exceeded expectations in Sunday's first-round vote with a slight lead over the incumbent.
Brazil-related stocks and ETFs surged in premarket trading on Monday. XP Inc. and iShares MSCI Brazil Small-Cap ETF rose 15%; iShares MSCI Brazil ETF rose 13%; Bank Bradesco SA, Itau Unibanco Holding SA, Petroleo Brasileiro SA Petrobras, and Nu Holdings rose 11%; Sabesp rose 9%; Vale SA rose 8%; Ambev SA rose 7%; Embraer S.A. rose 6%; Telefonica Brasil SA rose 4%.
The election, which centered around the cost of living, corruption and insecurity in Brazilians' daily lives, follows a string of wins across Latin America by right-wing parties aligned with US President Donald Trump.
Bolsonaro's stronger-than-expected performance, at 47% of votes versus Lula's 45%, is expected to buoy his campaign and may bolster Brazil's currency and stock market, which have risen on the prospects of the business-friendly challenger. Private surveys in the run-up to the election had forecast Lula leading the first-round vote by around 3 percentage points.
"Brazil wants change and I am very happy with the results," Bolsonaro told reporters in Brasilia after nearly all tallies were reported, heralding "the end of the era of (Lula's) Workers' Party."
The senator, son of right-wing former President Jair Bolsonaro, who is serving a 27-year sentence for plotting a coup after losing the 2022 election, now heads to an October 25 showdown with the leftist Lula.
Addressing a crowd at a hotel in Sao Paulo, Lula said he had been convinced he would win the election in the first round.
"Starting tomorrow, we begin a new campaign," he said, promising to show voters what he had accomplished as president.
Despite growing worries over Brazil's public finances and sluggish economic growth, the campaign offered meager policy debate, as both leading candidates skipped the major TV debates.