Brazil Election Sparks Stocks, Real and EWZ Rally

Brazil election results on Oct. 4, 2026 pushed domestic assets higher after Flávio Bolsonaro’s surprise first-round lead, lifting benchmark stocks and the currency as investors priced a more market-oriented runoff and brighter fiscal prospects.

TSE Confirms Runoff Candidates

Brazil’s Superior Electoral Court confirmed on Oct. 5, 2026 that Flávio Bolsonaro and Luiz Inácio Lula da Silva will contest a second-round presidential runoff. The first round on Oct. 4 produced no majority winner, setting the runoff for Oct. 25. Official tallies showed Bolsonaro with about 47% of the vote and Lula near 45%, with one live count listing 47.26% and 44.89% with 98.69% of votes counted. Bolsonaro’s party also expanded its Senate seats from 15 to 28, marking its strongest showing since Brazil’s return to democracy in 1985.

Markets Rally and EWZ Spike

The Bovespa index surged more than 8% in early trading, while the Brazil real strengthened over 4% against the U.S. dollar, moving below 5.00 per dollar from roughly 5.22. The EWZ ETF gained 13.68% in a real-time snapshot on Oct. 5. Market commentary linked the ETF’s low-teens percentage rise to a valuation re-rating, citing an estimated price-to-earnings ratio near 8.7 and a PEG ratio below 1.0.

The rally reflected Bolsonaro’s stronger-than-expected first-round performance and investor expectations of fiscal tightening, lower risk premia, and a more market-oriented policy stance. Bank forecasts included Société Générale’s projection of the real strengthening to about 5.10 per dollar by year-end 2026, with potential to dip below 5.00 in early 2027. Morgan Stanley outlined a scenario of further gains into the mid-4s in early 2027. These forecasts depend on the election outcome and the timing of policy signals.

“Flávio Bolsonaro (PL) e Lula (PT) vão disputar o 2º turno para a Presidência da República.” — Brazil Superior Electoral Court