The Brazilian stock market fell nearly 17 percent at opening on Monday after Luiz Inácio Lula da Silva won the election. This sharp drop triggered a 30-minute trading suspension. The US dollar also got stronger against the real. Investors reacted as stocks dropped below the levels seen before the recent vote.
The Brazilian stock market plummeted nearly 17 percent at opening on Monday, following the re-election of President Luiz Inácio Lula da Silva.
The leftist leader won 51.8 per cent of the vote to 48.2 per cent for his right-wing challenger Flavio Bolsonaro, the son of jailed ex-leader Jair Bolsonaro.
The sharp drop in the Ibovespa index triggered a 30-minute suspension of trading, while the US dollar surged 12 per cent against Brazil's currency, the real.
The decline activated a "circuit breaker" mechanism provided for "periods of sharp market decline", according to a statement.
Brazilian stocks had surged to record highs following Bolsonaro's first-round win earlier this month.
On Monday, they dropped below pre-election levels.
Other critical moments that have previously triggered the circuit breaker mechanism include the subprime crisis in the United States in 2008 and the Covid-19 pandemic in 2020.
Lula is concluding his third term with record employment rates and controlled inflation, although with rising public spending and growing debt.
Brazilians complain about the loss of purchasing power while authorities are concerned about household indebtedness.
The country maintains one of the highest benchmark interest rates in the world in an attempt to control rising prices.