Brazil financial markets plunged into sharp volatility after Luiz Inácio Lula da Silva’s unexpected re-election. Sources report Lula secured roughly 51.77–51.79% of valid votes versus Flávio Bolsonaro’s 48.21%, reversing market expectations that had priced in a Bolsonaro win. That rapid reversal of investor positioning triggered heavy selling across equities, bonds and currency markets. The iShares MSCI Brazil ETF (EWZ) dropped roughly 25–26% in premarket moves reported by various outlets, while alternative price discovery through crypto-linked markets signaled even larger swings.
A Hyperliquid perpetual contract tied to EWZ, issued under Hyperliquid’s HIP-3 framework and deployed by trade.xyz, fell as much as 27% before traditional markets reopened, providing an early indicator of the pressure. When Brazil’s B3 exchange opened, the Ibovespa plunged up to 17.34%, prompting a 30-minute trading suspension after an initial 10% drop. Major financial names were hit particularly hard: Bradesco fell about 28%, Itaú Unibanco around 20%, Nu Holdings about 21%, and XP shares plunged more than 52% in the session. Reports also noted the iShares ETF traded down to roughly $31.83 in U.S. premarket, a c.25.3% decline from Friday’s close; the fund later traded below $30 before partially recovering.
Market participants cited fiscal concerns as a core driver of the selloff. Analysts emphasized the need to see Lula’s choices for finance minister and a credible debt-control plan before investor confidence could stabilize. The real weakened sharply against the dollar—reports quoted moves in the c.10–12% range and noted declines of more than 11% in early trading—fueling worries about inflation and borrowing costs. The episode highlighted how 24/7 crypto-linked perpetuals can lead price discovery ahead of traditional markets and how political shocks can rapidly reprice sovereign risk and corporate valuations.