FX.co ★ Ibovespa Extends Election-Driven Rally

The Ibovespa climbed about 0.5% on Tuesday, approaching the 208,000 level after closing at a record 206,912 in the previous session, as Flávio Bolsonaro outperformed President Lula in the first round of the election, contrary to most pre-election polls. The outcome prompted a sharp repricing of Brazilian assets, with Bolsonaro securing 47.03% of valid votes compared with 45.16% for Lula. Investors perceive the senator as more fiscally conservative, a key consideration amid high domestic interest rates and subdued economic activity. Reflecting the improved sentiment, Morgan Stanley upgraded Brazilian equities to Overweight from Neutral. Financial stocks extended their rally after jumping as much as 22% in the prior session, with Itaú advancing 2% and Bradesco gaining more than 3.5%. Other notable winners included Rede D’Or, up 2%, and Sabesp, up 1.5%. Providing additional support to equities, Brazil’s 10-year bond yield fell below 13%, while global yields retreated from multi-year highs as oil prices eased.