Luiz Inácio Lula da Silva, the President of Brazil, achieved a historic victory in the second round of the presidential elections, defeating his right-wing rival Flávio Bolsonaro with 51.7% of the votes. This victory is seen as Lula's political comeback, as he was trailing behind Bolsonaro in the first round of elections.
Global Reactions to Lula's Victory
After the official results were announced, leaders from several Latin American countries and other parts of the world congratulated Lula. In his victory speech, Lula emphasized the need for regulations for large technology platforms and referred to allegations of Meta's interference in the elections. Meanwhile, Bolsonaro refused to accept the election results and called for the annulment of the results.
Severe Market Fluctuations
Following Lula's victory announcement, the São Paulo stock market was halted for 30 minutes due to a sharp decline of 17%. This significant drop in the Ibovespa index, which reflects the state of the Brazilian stock market, acted as a "circuit breaker." Additionally, the US dollar rose by up to 12% against the Brazilian real, marking one of the largest daily movements in the history of this currency. The price of raw sugar, one of Brazil's most important exports, also decreased by nearly 5%.
The markets were heavily influenced by Bolsonaro's refusal to accept defeat. Predictions indicated that Bolsonaro would win the election, and therefore, his refusal to accept the current situation has added to investors' concerns. Analysts believe that the speed of Bolsonaro's acceptance of the results or allowing the constitution to proceed will have a significant impact on local markets.
Challenges Ahead for Lula in His Fourth Presidential Term
Lula will face many challenges in his fourth presidential term. He will need to work with a Congress that has become one of the most conservative since Brazil's return to democracy in the 1980s. Bolsonaro's Liberal Party and its allies could control over 280 of the 513 seats in Congress.
While some global leaders congratulated Lula on his victory, including Emmanuel Macron and Pedro Sánchez, Russia also reacted to this victory, calling for strengthened relations between Brazil and Russia. These developments indicate major changes in global and regional policies that have occurred following Lula's victory.
