Brazil election: Ibovespa up 10% in October, dollar under R$5

Key takeaways

• Flávio Bolsonaro's first-round lead on October 4 set off a 7.70% one-day jump in the Ibovespa on October 5, the index's first close above 200,000 points, and the real strengthened by about 4% against the dollar.
• Since then, Brazilian stocks have moved with each runoff poll. The index rose 1.6% on October 20 after a poll favouring Flávio, fell 1.1% on October 22 as Quaest showed the gap narrowing, and gained 0.47% on October 23 after Datafolha showed a 50%–50% tie.
• Investors are mainly pricing fiscal policy. Some expect a Flávio Bolsonaro government to cut spending, which they see as a route to lower interest rates, but his campaign has not published concrete fiscal measures, according to Trading Economics.
• The Selic stands at 13.75%, according to Banco Central do Brasil data. The next Copom decision is due on November 4, and Monday, October 26, is the first trading session after the vote.

How the Ibovespa traded the Brazil election

Brazilian assets go into the October 25 runoff well above where they started the month. The Ibovespa closed Friday at 205,082.56, up 10.06% in October, and the dollar ended below R$5, Agência Brasil reported, with polls showing Lula and Flávio Bolsonaro statistically tied.

The Brazil election has been the main story for local markets since early October. On Friday, October 2, the last session before the first round, the Ibovespa closed at 192,114.55, according to The Rio Times. On Monday, October 5, after the Superior Electoral Court (TSE) reported that Flávio Bolsonaro had won 47.03% of valid votes to President Luiz Inácio Lula da Silva's 45.16%, the index closed at 206,911.89. That was a gain of 7.70% in one session.

The Rio Times reported that investors read the first-round result as raising the odds of a change of government and tighter public spending from 2027. CNN Brasil reported the next day that market participants saw a Lula comeback in the runoff as unlikely, and that Flávio was seen as more likely to prioritise fiscal adjustment, although his plans were not clear. Polls have since tightened, and markets have moved with them.

On the week to October 23, the Ibovespa slipped 0.17%, from 205,430 on October 16, according to Agência Brasil and The Rio Times. Trading Economics notes that its own index values come from CFD pricing and can differ slightly from official B3 data.

How the real moved

The currency reaction was just as sharp. The central bank's PTAX reference rate, which Banco Central do Brasil publishes each business day, fell from 5.2238 reais per dollar on October 2 to 4.9859 on October 5, meaning the dollar fell about 4.6% against the real in one session. In the spot market, the dollar closed October 5 down 4.12% at R$5.0022, The Rio Times reported.

The dollar then edged back up. The PTAX rate reached 5.0826 on October 16, and Agência Brasil reported that the dollar gained 1.77% in the week to that date. In the final week before the runoff it fell again. On Friday, October 23, the spot dollar closed at R$4.993, down 0.92% on the day and 1.58% on the week, according to Agência Brasil. The PTAX rate fixed earlier that day was 5.0377.

A stronger real does not help every company. InfoMoney reported, as cited by The Rio Times, that exporters such as Suzano, Embraer and WEG fell on October 5 because a firmer currency reduces the value of their dollar revenue in reais.

Banks and other stocks that moved on the polls

Large banks have been among the most poll-sensitive stocks, together with the B3 exchange operator. Trading Economics' session reports show this pattern in the final week:

Not every move was about the election. Vale tracked iron ore, Petrobras tracked crude oil, and Bradesco reacted to its own quarterly results. Agência Brasil reported that Brent crude rose 3.13% to $116.72 a barrel on October 23 amid Middle East tensions.

Brazilian shares listed in New York moved even more on October 5, because their dollar prices include the currency move. The Rio Times reported that the iShares MSCI Brazil ETF (EWZ) rose 12.57% that day, while the Itaú Unibanco and Bradesco ADRs gained 15.42% and 18.48%.

What investors are pricing: fiscal policy and the Selic

The link most often cited between the vote and asset prices is fiscal policy. Trading Economics reported that some investors view Flávio Bolsonaro as more likely to cut public spending, which they see as key to lower interest rates. It also noted that neither the candidate nor his economic advisers have set out concrete fiscal adjustments. The London-based consultancy Capital Economics said a Flávio win would bring better prospects of fiscal tightening and reform, The Rio Times reported. These are investor and analyst views, not an assessment of either candidate's programme.

Interest-rate futures show the same expectations. According to Valor, as cited by The Rio Times, the January 2031 DI contract fell 97 basis points to 13.02% early on October 5 and hit B3's daily limit. CNN Brasil reported that the January 2028 DI contract stood at 12.61% on October 6.

The official rate is set separately by the central bank's Monetary Policy Committee (Copom). Banco Central do Brasil data show the Selic target at 13.75%. The rate was cut by 0.25 percentage point on September 16, the fifth consecutive reduction, according to O Povo and The Rio Times. The Rio Times lists the next rate decision for November 4. Copom decides rates on its own mandate, whoever wins the presidency.

What to watch when markets reopen Monday

• The official result. The TSE publishes results on its official portal after polls close at 5 p.m. Brasília time (20:00 UTC) on Sunday. Markets will react to the margin as well as the winner, and to whether either campaign disputes the outcome.
• Monday's open. October 26 is the first B3 session after the vote. The Rio Times flagged the risk of price gaps in Brazilian ADRs and EWZ, which had no chance to trade on the result over the weekend.
• The real and DI futures. These have reacted fastest to fiscal news this month. Statements from the winner's economic team on spending rules and the budget will be closely read.
• Earnings. Santander Brasil reports on October 28 before the open, Vale on October 29 after the close, and Itaú Unibanco on November 3 after the close, according to Seu Dinheiro's calendar. Companies can change these dates.
• Copom, November 4. This is the first rate decision after the election. The central bank's weekly Focus survey of economists, usually released on Mondays, will show whether rate and inflation forecasts shift after the result.

What it means

October's rally shows that much of the market's reaction to the Brazil election came after the first round, when investors began to price a possible change of government and tighter spending. Since then, the Ibovespa's reported closes in the final week have ranged from 204,120 to 208,296, moving with each poll. The last polls show a statistical tie, so Friday's prices reflect uncertainty rather than a settled view.

The fiscal story behind the rally rests largely on expectations, not published plans. That leaves room for sharp moves in either direction once the winner names an economic team and sets out budget priorities. The real, rate futures and bank stocks have been the clearest gauges so far. Readers following Monday's session can compare the open with the October 23 levels in the tables above. For the political background, see our guide to the final week of the Brazil runoff. For the currency picture, see our forex weekly brief for October 23. More coverage is on the markets dashboard and the Brazil topic page.

Sources

• Agência Brasil — Dólar fecha abaixo de R$ 5 e recua 1,58% na semana (Oct 23, 2026)
• Banco Central do Brasil — SGS series 1, USD/BRL PTAX rate (data to Oct 23, 2026)
• Banco Central do Brasil — SGS series 432, Selic target rate
• Trading Economics — Ibovespa session reports, Oct 20–23, 2026
• Trading Economics — Brazil stock market (Ibovespa)
• The Rio Times — Brazil stocks jump 7.7% to a record as the real gains 4% (Oct 5, 2026)
• The Rio Times — Brazil runoff set; Ibovespa entered vote at 192,115
• The Rio Times — Brazil stocks rise 0.47% ahead of runoff (Oct 23, 2026)
• CNN Brasil — Bolsa realiza lucros após euforia com 1º turno; dólar fecha abaixo de R$ 5 (Oct 6, 2026)
• CNN Brasil — Datafolha: Flávio e Lula empatam em 50% de votos válidos no 2º turno (Oct 22, 2026)
• O Povo — Copom faz quinto corte de 0,25 ponto percentual e Selic vai a 13,75% (Sep 17, 2026)
• Seu Dinheiro — Q3 2026 earnings calendar
• Tribunal Superior Eleitoral — Flávio Bolsonaro (PL) e Lula (PT) vão disputar o 2º turno
• Tribunal Superior Eleitoral — Official results portal

This article is for information only and is not investment advice.