Brazil markets rout after Lula’s surprise reelection

Brazilian markets fell sharply after Luiz Inácio Lula da Silva’s unexpected reelection overturned investors’ earlier bets on a more market-friendly government. The benchmark Ibovespa index dropped 10%, triggering an automatic 30-minute trading pause, while the real lost roughly 12% against the dollar. Investors were repricing the prospect of looser public spending and a tougher path to controlling Brazil’s debt, concerns that can mean higher inflation, interest rates and borrowing costs. The shock also dragged on emerging-market assets, showing how quickly an election result can reverse a trade built around a very different expected outcome.