Brazil's EWZ sinks up to 19.6% as Lula wins re-election

Key takeaways

• The iShares MSCI Brazil ETF (EWZ) dropped between roughly 18% and 19.6% in US after-hours trading on Sunday night, according to InfoMoney, Poder360, CNN Brasil and Seu Dinheiro.
• Petrobras ADRs lost about 12%, Itaú Unibanco's ADR 13.65% and Vale's ADR more than 4%, the same outlets reported.
• The November real futures contract on CME fell as much as 10.59%, implying a dollar near R$5.50 against about R$5.01 on Friday, according to Money Times and Exame.
• Analysts quoted by Brazilian media linked the sell-off to investors unwinding bets on a Flávio Bolsonaro win and a tighter fiscal policy.
• After-hours liquidity is thin. The first full test comes when B3 opens on Monday: dollar futures at 12:00 UTC and the Ibovespa at 13:00 UTC.

EWZ and Brazilian assets plunge after Lula's re-election

Brazil's EWZ ETF sank as much as 19.6% after hours in New York after President Luiz Inácio Lula da Silva won re-election in Sunday's runoff, and real futures slid about 10% on CME, Brazilian financial media reported.

The moves began as the count turned decisively in Lula's favour late on October 25 (Brasília time). The Superior Electoral Court (TSE) count gave Lula about 51.8% of valid votes against roughly 48.2% for Senator Flávio Bolsonaro, as we reported in our coverage of Lula's runoff victory.

What happened, hour by hour (UTC)

• 22:37 UTC, Oct 25: With the count still under way, the November real contract on CME was down 4.03%, implying a dollar at R$5.22, Exame reported. The drop narrowed to 2.50% minutes later when Bolsonaro briefly retook the lead.
• 00:16 UTC, Oct 26: EWZ was down 18.53% at $34.69, according to InfoMoney. Petrobras's PBR ADR was down 11.96% at $23.15 and PBR-A down 10.33% at $21.10.
• 00:42 UTC: CNN Brasil reported EWZ down 17.75% at $35.03, a loss of $7.56 per share.
• About 00:50 UTC: The November real contract was down 10.59% on volume of just over 70,300 contracts, implying a dollar of about R$5.50 for Monday, Money Times reported.
• 00:52 UTC: Poder360 put EWZ down 17.97% at $34.94.
• About 01:00 UTC: Seu Dinheiro reported EWZ's decline at 19.63% at its deepest, Vale's ADR down 4.4%, and the Next Funds Ibovespa Linked ETF in Tokyo down 11.80%.

Exact percentages differ because each outlet captured a different moment in a fast, thinly traded session.

Brazilian assets overnight: the numbers

Data as of about 01:30 UTC, October 26, 2026. After-hours and overnight prices, not official closing levels.

Why markets fell: what analysts said

Brazilian markets had spent October pricing in a change of government. After Flávio Bolsonaro led the first round on October 4, the Ibovespa jumped 7.70% the next day and EWZ rose 12.54%, according to Exame. Some investors expected a Bolsonaro government to tighten spending and open room for lower interest rates, as we explained in our look at how the Ibovespa and the real traded before the runoff.

"The market spent the month of October buying the thesis of a change in power," Gabriel Pinheiro, a partner at GT Capital, told Poder360. He said investors would demand a premium until Lula's government presents a credible fiscal plan, and he expects a sharp, volatile session on Monday.

Gustavo Sung, chief economist at Suno Research, told InfoMoney that a Lula victory "was not our base case." He expects volatility in the currency and in the DI interest-rate futures curve, and possible stress in government bonds. Marcos Weight, treasury director at Travelex Bank, told Money Times he expects the spot dollar to open above R$5.30 and the central bank to step in with spot dollar sales.

These are views of individual analysts. The cause of the sell-off has been widely attributed to the election result, but the size of Monday's move in São Paulo is not yet known.

What we know and what we don't know yet

• Known: Brazil-linked ETFs, ADRs and real futures fell sharply in overnight trading as the TSE count confirmed Lula's lead, according to at least five Brazilian financial outlets.
• Known: On Friday, October 23, the Ibovespa closed at 205,082.56, up 0.47%, and the spot dollar ended at R$4.993, according to Agência Brasil.
• Not yet known: How far the Ibovespa and the spot real will move once B3 opens. Pinheiro estimated a 5% to 9% fall at the open, but this is a forecast, not data.
• Not yet known: Whether B3's circuit breaker will be triggered. Under the rule described by Seu Dinheiro, trading halts for 30 minutes if the Ibovespa falls 10% from the prior close.
• Not yet known: Whether Banco Central do Brasil will intervene in the currency market, and what Lula's team will say about fiscal targets.

Background

EWZ tracks the MSCI Brazil index, in which financials, energy and materials carry the largest weights, Poder360 noted. That makes it the most-watched proxy for Brazilian stocks when B3 is closed. Lula's win reversed the first-round result, in which Bolsonaro took 47.03% to Lula's 45.16%. The final week of the campaign was fought partly in the courts, and Bolsonaro has said he will ask for the result to be annulled.

Brazil's Selic rate stands at 13.75% after a cut in September, according to Banco Central do Brasil data, and the next Copom decision is due on November 4. Seu Dinheiro noted that gross public debt is about 83% of GDP and that a larger right-wing bloc in Congress could make it harder for the government to pass its agenda.

What it means

The overnight drop signals a sharp repricing of Brazilian risk, but after-hours prices often overshoot because few traders are active. Monday's B3 session, the reaction of the central bank, and any early signals from Lula's economic team on spending and debt will show whether the losses hold. Watch the dollar futures open at 12:00 UTC, the Ibovespa open at 13:00 UTC, and the November 4 Copom meeting. More coverage: Brazil and Ibovespa.

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