Lula Wins Brazil Presidency, Markets Crash

Flávio Bolsonaro was in the United States by Tuesday, two days after losing Brazil’s presidential election. He departed before his party leaders accepted President Luiz Inácio Lula da Silva’s win. Brazilian markets were still processing the outcome, which caught many investors off guard.

Voters gave Lula 51.79% of valid ballots. He received 64,256,232 votes compared to 59,826,041 for Bolsonaro. That margin of over 4.4 million votes secured Lula a fourth term. However, the left did not gain full control of Brasília. The Liberal Party won 121 seats in the lower chamber and 28 in the Senate. Gilson Schwartz of the University of São Paulo estimates the broader right now holds about 59% of the Chamber of Deputies.

Schwartz told The Media Line that Brazil elected a divided government rather than a unified left-wing regime. He explained that voters supported Lula for social protection and stability while backing conservative candidates on issues like crime and taxes. This split will complicate Lula’s domestic agenda. Igor Barenboim, a former Brazilian secretary of economic policy, noted that Congress prefers to spend money on local projects. He rejected the idea that a conservative legislature would automatically enforce fiscal discipline.

Financial markets reacted sharply to the election results. The Ibovespa index closed 13.88% lower after trading was briefly halted. The US dollar gained more than 8% against the Brazilian real. Barenboim attributed the volatility to traders unwinding positions they had taken when Bolsonaro led the first round. He pointed to deeper issues in public accounts, estimating government debt rose from 72% to 83% of GDP during Lula’s previous term. The primary deficit is close to half a percentage point of GDP, with a nominal deficit around 9% when high interest rates are included.

Bolsonaro initially sought to annul the election over extended voting times in some areas. Only about 34,300 ballots were cast after the original closing time. His party later recognized the result from the Superior Electoral Court. Bolsonaro then shifted his argument to claim abuse of power. He traveled to the US after failing to surrender his passports in a separate money-laundering investigation. A senior US official said he and his family would receive visas, though Washington did not announce asylum.

Trump questioned the results without presenting evidence of fraud. His administration’s willingness to host Bolsonaro adds friction to a relationship already strained by trade disputes. Schwartz warned of a transnational opposition operating through Brazil’s congressional bloc and US political networks. He noted that neither he nor Barenboim expects a full diplomatic break. Brazil’s economy is concentrated in exports like soybeans, corn, and coffee. Barenboim said US financial sanctions would be more damaging than political quarrels or tariffs.

Presidents from Chile, Peru, Ecuador, and Colombia acknowledged Lula’s victory. Their governments still rely on Brazil for border security, energy, and migration cooperation. Brazil and Israel may enter 2027 without ambassadors, but trade continues. Brazil sold about $569 million in goods to Israel in 2025 and bought roughly $1.3 billion. Agricultural sales from January through September 2026 had already exceeded the total for all of 2025.