Brazilian markets up but volatile eyeing Bolsonaro reaction to loss

By Al Mayadeen English
Source: Agencies
31 Oct 2022 20:26

Sao Paolo's exchange market rose after Lula's victory in the elections, though volatile in anticipation of Bolsonaro's reaction to his loss.

Brazil's elected President Luiz Inacio Lula da Silva leads the 'march of victory', in Sao Paulo, Brazil October 29, 2022 (REUTERS).

Following the presidential victory of Luiz Inacio Lula da Silva over his opponent Jair Bolsonaro, the Sao Paulo stock exchange (B3) witnessed a volatile yet overall increasing session first thing on Monday.

The Bovespa Index, a benchmark index of around 92 stocks traded on the B3, recovered from an opening retreat to gain around 2% before settling to 0.3% during early afternoon trade, while the Brazilian real soared against the dollar, marking a 2.2% gain.

As Bolsonaro remained silent about his defeat, markets have been monitoring the unfolding of events of his election loss and signs of Lula's policies to handle the country's economy as he is yet to announce his economic team.

Thais Zara, an economist at LCA Consultores, commented on the matter stating that "the elections are over, but the uncertainty hasn't disappeared, especially on how economic policy will be from January 1," when the newly elected President will be formally admitted to office.

President Lula will have to lead a congress outnumbered by conservatives, which, according to experts, will probably reposition veteran leftists towards the center of economic policies.

Zara added that volatility in the markets will remain as observers are monitoring whether Bolsonaro would attempt a move to change the elections' outcome.

Electoral officials proclaimed Lula the winner with 50.9% of the vote to Bolsonaro's 49.1% on Sunday, following an election runoff.

Despite the market favoring Bolsonaro for his businesses-oriented agenda, analysts suggest that the markets had already aligned prices for Lula's victory.

The former leftist President, whose term lasted from 2003-2010, urged "peace and unity" after defeating far-right Bolsonaro, who is yet to concede, but da Silva has concluded a historic political comeback.

The victory represents a stunning turnaround for the leftist icon, who returned for an unprecedented third term at 77 after leaving office in 2010 as the most popular President in Brazilian history.

"This country needs peace and unity," Lula said to loud cheers in a victory speech in Sao Paulo.