What Happened to the Dollar and the Stock Market After Lula's Victory?
Lula (PT) was reelected with 51.78% of valid votes against Flavio Bolsonaro's (PL) 48.22%, and markets trading late Sunday reacted sharply: the EWZ, an ETF tracking Brazilian equities traded in New York, fell between 18% and 20%, while the Brazilian real futures contract in Chicago pointed to a dollar near R$ 5.51, compared to Friday's settlement of R$ 5.0088. The B3, where prices are actually set, opens on Monday (10/26). Flavio stated that he does not recognize the result and will petition to annul the election; as of Sunday evening, the reports consulted showed no proof of fraud presented.
Read overnight quotes with caution. The EWZ, CME real contract, and Tokyo ETF trade with low liquidity outside regular hours, and Exame warns that moves can be exaggerated. The "R$ 5.50 dollar" in these contracts is an implied rate, not the commercial quote. The key benchmark is the B3 on Monday: dollar futures at 9:00 AM and the cash Ibovespa at 10:00 AM (Brasília time). This text was updated at 12:25 AM on 10/26, prior to the opening.
What Was the Official Election Result by Vote Count?
With 99.98% of precincts reporting, Lula received 64,239,310 votes (51.78% of valid votes) and Flavio Bolsonaro received 59,817,980 (48.22%), according to Times Brasil (11:12 PM), citing figures compiled by the TSE. The difference is 4,421,330 votes—our calculation based on tribunal figures—or about 3.6 percentage points. The TSE declared Lula mathematically elected at 9:10 PM, according to InvestNews. Abstention stood at 19.21% at 9:41 PM, compared to 21.08% in the first round, according to InfoMoney.
By comparison: in the 2022 runoff, Lula won with 60,345,999 votes (50.90%) against Jair Bolsonaro's 58,206,354 (49.10%), a difference of 2,139,645 votes or 1.80 points, according to Gazeta Mercantil, based on TSE data. The 2026 margin is roughly double that of 2022 in votes. Certification is expected by December 18, and the inauguration of Lula and Vice President-elect Geraldo Alckmin (PSB) is scheduled for January 5, 2027. Under the Constitution (Art. 14, §5), he cannot run for a third consecutive term in 2030.
Percentages vary in the second decimal place across media outlets (51.76% to 51.79%) because each captured the vote tally at a different moment. Final figures and breakdowns by precinct are available on the official TSE dashboard.
How Did Each State Vote in the Runoff?
Lula won in 13 states; Flavio won in 13 states and the Federal District, according to a survey by Metrópoles. The entire Northeast region went to Lula, with over 60% in every state. Flavio dominated the South, the Midwest, and the Federal District. The Southeast was divided: Minas Gerais, the only state to switch sides compared to the first round, went to Lula by about 100,000 votes.
| Lula Won | % Valid | Flavio Won | % Valid |
|---|---|---|---|
| Piauí | 75.88% | Roraima | 72.46% |
| Bahia | 71.32% | Rondônia | 69.61% |
| Maranhão | 69.54% | Santa Catarina | 69.42% |
| Sergipe | 69.53% | Acre | 66.57% |
| Pernambuco | 69.21% | Mato Grosso | 66.06% |
| Ceará | 68.93% | Paraná | 62.58% |
| Paraíba | 67.46% | Goiás | 59.66% |
| Rio Grande do Norte | 65.72% | Mato Grosso do Sul | 59.60% |
| Alagoas | 60.77% | Rio Grande do Sul | 57.84% |
| Pará | 55.01% | Espírito Santo | 56.37% |
| Amazonas | 54.02% | Federal District | 54.28% |
| Amapá | 52.88% | São Paulo | 53.85% |
| Minas Gerais | 50.40% | Rio de Janeiro | 53.10% |
| Tocantins | 51.37% |
Source for state percentages: Metrópoles, with partial tabulations (Minas Gerais appears with 50.40% to 50.43% depending on the outlet). In Minas, Bloomberg Línea reports that Flavio won the first round by 589,000 votes and Lula won the second by about 100,000 (50.43% to 49.57%).
How Lula Reversed the Outcome: From the First Round to the Runoff
In the first round on October 4, Flavio finished ahead with 56,104,268 votes (47.03%) compared to Lula's 53,876,617 (45.16%), a gap of 2,227,651 votes, according to Gazeta Mercantil. Between the two rounds, Lula added roughly 10.4 million votes and Flavio about 3.7 million (our calculation, comparing the two rounds). Bloomberg Línea describes the pattern as a redistribution of votes rather than a loss of support for the PL: where Flavio was strong, he maintained his strength; where he was a minority, Lula made larger gains, absorbing votes previously dispersed among other candidates. Gazeta Mercantil notes that a comparison between rounds does not mean the exact same voters migrated from one candidate to the other.
- Northeast: Lula added about 2.95 million votes in the region; Bahia delivered the largest absolute gain (820,000 votes) and Alagoas saw the largest expansion in his lead (from 14.3 to 21.5 points), according to Bloomberg Línea.
- Southeast: In São Paulo, Flavio moved from 12.92 to 14.14 million votes while Lula went from 9.51 to 12.12 million; Flavio's lead shrank from 13.7 to 7.7 points. In Rio de Janeiro, Flavio's lead dropped from 13.6 to 6.2 points.
- Third-party candidates: Augusto Cury (Avante) won 2.89% (3,448,569 votes) in the first round and stated he would not support either finalist; Renan Santos (Missão) secured 2.24% and Ronaldo Caiado (PSD) 2.18% (Bloomberg Línea). In Goiás, Bloomberg Línea notes that Caiado's 12.33% share in the first round was distributed between the two finalists.
What worked and what fell short, based on available facts. For Lula, key drivers include gains in the Northeast, the turnaround in Minas Gerais, and a reduced deficit in São Paulo and Rio. High voter rejection and limited room for growth were challenges highlighted before the runoff by an analyst interviewed by Nexo Jornal. For Flavio, he increased his absolute vote count (by about 3.7 million), held the South, Midwest, São Paulo, and Rio, and led the first round, but his growth lagged behind Lula's. During the campaign, according to Nexo, Lula targeted undecided voters while Flavio focused on anti-PT sentiment.
The polls. In the final week, published polls were split within the margin of error: Datafolha showed a 50% to 50% tie, Alfa and Real Time Big Data had Flavio ahead 52% to 48%, and Vox Brasil showed Lula leading 50.6% to 49.4% (Exame, 10/23). An analyst from Manchester Investimentos told InfoMoney that of the 13 polls reviewed, all pointed to Flavio ahead by an average margin of 2.4 points. The outcome defied what the market had been pricing in, according to Money Times.
What the Victory Means: Government, Congress, and Fiscal Policy
The victory does not guarantee a built-in congressional majority. In the Chamber of Deputies, the PL won the largest bloc with 121 of the 513 seats; the PT holds 70, União Brasil 46, the PSD 43, and the PP 41, while the centrist bloc (PSD, União, Republicanos, and PP) totals 171 seats, according to CNN Brasil. In the Senate, the PL grows from 15 to 28 of the 81 senators, becoming the largest bloc, while the PT retains 9 (Agência Brasil and Senado Notícias). No single party holds an absolute majority in either chamber. The budget and administration proposals will require negotiation with Congress, political parties, and state governments, as Gazeta Mercantil observes.
On the fiscal front, general government gross debt stands at R$ 11.1 trillion, or 82.9% of GDP (figures cited by Forbes), and Bradesco BBI projects it will climb from 83.6% to 88.2% of GDP over the coming years. GDP grew 0.5% in the second quarter compared to the first and 1.9% over four quarters, according to IBGE data cited by Forbes. The new administration's economic team has not yet been announced; the initial signal, according to analysts such as Gustavo Trotta (Valor Investimentos), will be the choice of the Finance Minister and the commitment to the fiscal framework.
Was There Fraud? What Was Claimed and What TSE, Observers, and Audits Say
This section separates claims from proven facts without taking sides. According to InfoMoney (10:50 PM) and Folha Expressa, Flavio stated on Sunday night that "it is impossible to recognize the result of this election in the context of what happened" and that "we will request the annulment of these elections." Two main allegations were raised: the decision to extend voting hours created unequal treatment among voters in different states ("in a state where the polls were not reopened, I will never know how many votes I might have had") and PL inspectors "were removed from the secure data room." He also questioned whether the decision came from Supreme Court (STF) Justice Cristiano Zanin rather than a TSE justice.
| Point | Documented Facts | Source |
|---|---|---|
| Voting Extension | The PT asked the TSE for an extension at 1:22 PM (citing a lack of buses in Bahia), expanded the request at 3:42 PM, and appealed to the STF at 4:22 PM. The PL requested a voting extension at 3:50 PM in 19 cities across São Paulo, Paraná, and Santa Catarina (due to heavy rain, flooding, and power outages). Zanin, assigned as rapporteur at 4:33 PM, ruled at 5:03 PM to extend voting until 7:00 PM nationwide. | Poder360 |
| Scope of the Decision | Zanin later clarified that the ruling applied only where polling stations had not yet closed; where they had closed, votes were already tallied. Justice Nunes Marques instructed polling stations still open to operate until 7:00 PM "in strict compliance with the judicial order." The TSE paused vote tabulation at 5:20 PM. | Poder360, InfoMoney, CNN Brasil |
| Judiciary Reaction | Anonymous TSE justices told CNN Brasil that the ruling caused discomfort and that they see no grounds for a third round; an anonymous STF justice also criticized the TSE leadership's handling and defended a new election. These are private assessments with no official statements issued. | CNN Brasil (10/25, 6:54 PM) |
| Secure Room | This allegation comes from Flavio. The consulted reports contain no details on who was removed, when, or under what procedure, nor did the TSE issue an official response on this point by Sunday night. | InfoMoney, Folha Expressa |
| Evidence of Fraud | No proof of fraud or irregularities that altered the outcome was presented in the reports consulted; Folha Expressa notes that statements alone do not substantiate these claims. | Folha Expressa |
| Integrity Testing | The TSE conducted integrity tests using two voting machines and 389 votes pre-recorded on paper with no discrepancies found (the test date is not specified in the source). | Gazeta Mercantil |
| International Observers | Seven missions monitored the runoff: the OAS (headed by José Miguel Insulza), the European Union, Parlasul, Uniore, and ROJAE-CPLP, among others. These same missions monitored the first round and published preliminary reports on the TSE website. We found no conclusions from them regarding the runoff; in 2022, the OAS concluded that the election proceeded in an orderly and normal manner. | Times Brasil, Istoé, TSE |
| Flavio's Previous Stance | In August, on Band's Canal Livre, he stated that he would accept the ballot box results and trusted an impartial TSE. | Jornal de Brasília |
| Annulment Petition | Announced by Flavio, with the campaign's legal team tasked with filing it. We found no record of a formal filing by Sunday night; it will fall to the Electoral Court to review the facts and evidence. | Folha Expressa, Rádio Senado |
Historical context provides a baseline, though it does not resolve the 2026 case. In 2014, the PSDB asked the TSE for an election audit, and it found no irregularities (Exame, cited by Agência Lupa). Between 2021 and 2024, Lupa published at least 26 fact-checks debunking rumors concerning the source code of the voting machines. Nunes Marques, in a Sunday statement, said he called both candidates to confirm the results and highlighted Flavio's "significant vote share."
How Offshore and Overseas Assets Reacted Hour by Hour
| Asset | Movement | Reference | Source and Time |
|---|---|---|---|
| EWZ (Brazil ETF, NY) | −18.29% | US$ 34.80 | Exame, Sunday night (80.75% of precincts reporting) |
| EWZ | −19.63% | US$ 34.23 | Guia do Investidor and Money Times, first minutes of Sunday after-hours trading |
| EWZ | ≈ −20% | after-market | InfoMoney, 9:25 PM |
| Real, CME futures contract (Chicago) | −10% | — | InfoMoney, 9:51 PM |
| Real, CME futures contract | −11% | implied dollar near R$ 5.50 | Seu Dinheiro and Guia do Investidor, around 10:00 PM |
| Petrobras ADR | ≈ −12% | — | Seu Dinheiro, around 10:00 PM |
| Vale ADR | ≈ −4.4% | — | Seu Dinheiro, around 10:00 PM |
| Ibovespa ETF in Tokyo | ≈ −13% | Nomura NF Ibovespa Link: −12.75%, at 285.3 yen | Bloomberg Línea and Money Times (Monday market open in Japan) |
For comparison: on Friday (10/23), the Ibovespa closed up 0.47% at 205,082.56 points, and dollar futures settled at R$ 5.0088. Following the first round, the Ibovespa jumped 7.7% in the first trading session to 209.6 thousand points (up from about 192 thousand prior), and the dollar fell from R$ 5.22 to R$ 5.00, according to InfoMoney. The Tokyo ETF had gained nearly 8% in that round and is now giving back about 13%. Exame notes that the EWZ lost more in a single night than it had gained since the first round. Discrepancies among EWZ quotes in the table reflect the timestamp of each reading rather than conflicting data.
What About Bitcoin and the Dollar on Crypto Exchanges?
We found no reliable public quotes for USDT/BRL or dollar NDFs on Sunday night, and therefore omitted those figures. Nor did we find post-result interest rate futures (DI) data, as the B3 interest rate market was closed. Verifiable data: according to BitNotícias, Bitcoin closed Sunday at 9:00 PM at US$ 80,038, down 1.0% over 24 hours, trading in a range between US$ 80,000 and US$ 80,950 with no visible reaction to the Brazilian election. The Federal Reserve is scheduled to decide U.S. interest rates on Wednesday (10/28). The price in reais depends on the exchange rate used: at the implied dollar rate of R$ 5.5127, US$ 80,038 equals about R$ 441 thousand; at Friday's settlement rate (R$ 5.0088), it equals about R$ 401 thousand. This is an illustrative calculation, not an exchange quote.
What Was Already Priced In and What Was Not?
Priced in, according to cited analysts: the October rally, which wagered on a political transition. Matheus Spiess (Empiricus) notes that with Flavio leading in the polls and the first round, the market had been pricing in a shift in economic management featuring fiscal adjustments and a narrowing risk premium on the yield curve. InfoMoney points out that the MSCI Brazil had accumulated a gain of about 13% in dollar terms in October and traded at 9.3 times projected earnings, 7% below its historical average (compared to a discount of roughly 20% in June). Part of the disappointment was also anticipated, according to Money Times; in a Citi investor survey conducted Friday and cited by InfoMoney, 79.5% expected the Ibovespa to drop more than 5% if Lula won, 63% projected a real devaluation exceeding 5%, and 67.1% anticipated a rise of more than 100 basis points in January 2029 DI futures.
What is not yet priced in: a credible fiscal plan. Felipe Balassiano (ASA) states that the market was not positioned for this outcome and expects high volatility, a sliding stock market, a weaker real, and rising yield curves until the incoming administration reinforces its fiscal commitment. Gustavo Sung (Suno Research) recalls that after 2022, the stock market regained ground once the government presented fiscal measures, and that 2027 will depend on economic policy and negotiations with Congress. Rodrigo Marcatti (Veedha) assesses that with continuity in government, "we will not have the benefit of the doubt that the previous victory provided." Sidney Lima (Ouro Preto) projects a cautious week, with the Ibovespa under pressure and the dollar and DI rates rising.
Projections for the market open: Capital Economics projects a 5% to 10% drop in the Ibovespa during the first trading session (Money Times); Gabriel Uarian (Cultura Capital) forecasts a decline exceeding 5% with the risk of a circuit breaker, naming retail, construction, consumer credit banks, brokerages, and B3 among the hardest hit, while exporters, mining, and agribusiness hold a relative advantage. Bradesco BBI downgraded Brazil from overweight to neutral at 9:59 PM and cut ratings for BBAS3, PETR4, B3SA3, COGN3, and CYRE3, favoring EMBJ3, SUZB3, WEGE3, JBSS3, SBSP3, and BBSE3; the firm indicated it would return to an overweight stance upon a significant correction, a credible fiscal package, or a monetary easing cycle. These reflect individual firm positioning, not recommendations from Rico aos Poucos.
What to Expect at Monday's Market Open (10/26)?
- Dollar: Travelex's treasury director sees the spot dollar potentially opening above R$ 5.30, and Seu Dinheiro lists an opening between R$ 5.30 and R$ 5.50 as a possibility.
- Equities: B3 triggers a circuit breaker when the Ibovespa drops 10%, pausing trading for 30 minutes on its first occurrence (Seu Dinheiro). Dollar futures open at 9:00 AM and cash equities open at 10:00 AM.
- Interest Rates: Sung points to volatility and the risk of more persistent inflation, leaving less room for Selic rate cuts.
- Fiscal Policy: JPMorgan estimated in a September 29 note that gradual fiscal deterioration could mean a 21% drop in Brazilian equities and about a 6% decline in the real.
How This Hits Retail Portfolios: Interest Rates, FIIs, Tesouro, and the Dollar
Interest Rates and the Selic. The Selic benchmark rate has stood at 13.75% per year since 9/17/2026 following 0.25-percentage-point cuts per meeting, with the next Copom decision scheduled for November 4. A stronger dollar and rising interest rate futures complicate the continuation of rate cuts, in Sung's view; the decision rests with the Central Bank, which has yet to signal its stance following the results.
Real Estate Funds (FIIs). Brick-and-mortar FIIs are typically evaluated against long-term interest rates: when benchmark yields rise, unit prices tend to face downward pressure, as we detailed in why FIIs were falling amid interest rates, the dollar, and the election. Paper funds indexed to the CDI and IPCA exhibit different sensitivity: yields follow the underlying index, and risk centers more on credit quality than on rate movements.
Tesouro Direto. Fixed-rate and IPCA+-linked government bonds are marked to market: if market yields climb, selling prices prior to maturity fall, even if the bond pays out exactly what was contracted at maturity. The Tesouro Selic is largely insulated from this mark-to-market impact.
The Dollar. In Rico aos Poucos's asset allocation model, in effect since 10/18/2026, the dollar carries a 25% weighting under an Optimistic view, while Bitcoin, gold, and the S&P 500 sit at 0% under a Pessimistic view. Other weights include cash at 30% (Optimistic), TLT at 15% (Optimistic), FIIs at 10%, real estate at 10%, Ibovespa at 5%, and IPCA+ at 5% (all Neutral). This allocation was established prior to the election outcome and remains unchanged by this article.
What to Monitor at the Open and in the Days Ahead
Monday (10/26): Dollar futures at 9:00 AM and the Ibovespa at 10:00 AM; whether a circuit breaker is triggered; where the commercial dollar closes relative to the R$ 5.50 implied rate; interest rate futures. Wednesday (10/28): Federal Reserve rate decision. In subsequent days: the TSE's position regarding Flavio's announced annulment petition; reports from observation missions; the announcement of the economic team and initial signals on fiscal targets. November 3 and 4: Copom meeting; by December 18: official certification; January 5, 2027: inauguration.
Frequently Asked Questions
Who won the 2026 presidential election and by what margin?
Lula (PT) won the runoff with 51.78% of valid votes (64,239,310 votes) against Flavio Bolsonaro's (PL) 48.22% (59,817,980), with 99.98% of precincts reporting—a difference of about 4.4 million votes.
Will the dollar hit R$ 5.50 on Monday?
There is no way to know for certain. That figure stems from the CME real futures contract, traded on low liquidity Sunday evening. Analysts cited by the press project an opening spot dollar between R$ 5.30 and R$ 5.50; confirmation will come from B3 dollar futures when they open at 9:00 AM.
What is the EWZ and why did it fall nearly 19%?
The EWZ is an exchange-traded fund holding Brazilian stocks, traded in New York. It dropped between 18% and 20% during Sunday's after-hours session, pricing in the election reaction ahead of the B3 during a low-liquidity window where price moves can be exaggerated.
What is a circuit breaker?
It is the automatic suspension of B3 trading when the Ibovespa drops 10%. On its first occurrence in a day, trading halts for 30 minutes.
Was there fraud in the election?
As of Sunday night, the reports consulted showed no concrete proof of fraud presented. Flavio Bolsonaro is challenging the extension of voting hours until 7:00 PM authorized by STF Justice Cristiano Zanin, and claims PL inspectors were removed from the secure data room. The TSE clarified that the extension applied only to locations where polling stations were still operational. Any formal annulment depends on judicial review of facts and evidence.
Has Flavio Bolsonaro filed the annulment petition?
He announced that his legal team will file the petition. We found no record of a formal filing as of Sunday night.
What happens to the Selic rate and Tesouro Direto?
The Selic rate is set at 13.75% and the Copom meets next on November 4. A stronger dollar and rising interest rate futures could reduce room for rate cuts, according to analysts. Fixed-rate and IPCA+-linked bonds fluctuate in price prior to maturity when market yields change.
When does Lula take office?
The inauguration is scheduled for January 5, 2027, following certification by December 18, 2026.
Where can I find official figures?
On the TSE results portal (resultados.tse.jus.br). Figures in this article originate from timestamped news reports and may shift in the second decimal place as official tallies update.
Sources and References
Results and voting: Times Brasil (TSE, 11:12 PM), InfoMoney (live coverage 10/25), InvestNews (TSE, 9:10 PM), Gazeta Mercantil (1st round and 2022), Metrópoles (states), Bloomberg Línea (1st vs. 2nd round). Congress: CNN Brasil, Agência Brasil, and Senado Notícias. Claims and institutional responses: InfoMoney, Folha Expressa, Poder360, CNN Brasil, Rádio Senado, Agência Lupa, Times Brasil, and the TSE. Markets: Exame, Seu Dinheiro, Guia do Investidor, Money Times, Bloomberg Línea, Forbes, and InfoMoney, at the indicated times; Bitcoin data via BitNotícias (10/25 at 9:00 PM). Selic and Copom calendar: Central Bank of Brazil, via our database. Figures not found in reliable sources (interest rate futures, NDFs, USDT/BRL, Ibovespa futures) were intentionally omitted.
Read also: Political violence in the runoff: what Alckmin and Lula said · Treasury IPCA+ and post-fixed CDBs after the election · Who raised and spent more in the 2026 campaigns · Homebuilders: what the election means for the stocks
