Lula wins Brazil: markets bet 13% on his loss, the real rose anyway

Short answer: Lula won Brazil's October 25 runoff with 51.76% to Flavio Bolsonaro's 48.24%, per the TSE count reported by Latin Times. Three weeks earlier, Wall Street bought Brazil like a Bolsonaro win was done: Nubank jumped 13.0% and the EWZ Brazil ETF 12.5% in one session. Our bet is that the "Bolsonaro trade" was never about Bolsonaro, and the first quote after the result says the same thing: the real got stronger, not weaker.

TL;DR: On October 5, the first trading day after Flavio Bolsonaro led round one 47.03% to 45.16%, Itau rose 15.5%, Nubank 13.0%, EWZ 12.5% and Petrobras 11.5%, while the S&P 500 moved 0.7%. Lula then came back to win by about 4.3 million votes out of roughly 123.8 million cast. On Monday morning the dollar bought 4.993 reais, down from 5.050 on Thursday, so the currency that was supposed to crash on a Lula win is trading at its strongest level of the month.

Key numbers

What	Number	Source, checked Oct 26 2026
Lula runoff share	51.76%	Latin Times, TSE count
Flavio Bolsonaro runoff share	48.24%	Latin Times, TSE count
Round one, Oct 4	Bolsonaro 47.03%, Lula 45.16%	Latin Times
EWZ one-day move, Oct 2 to Oct 5	+12.5%	Our Yahoo Finance pull
Nubank one-day move	+13.0%	Our Yahoo Finance pull
Itau one-day move	+15.5%	Our Yahoo Finance pull
S&P 500 (SPY) same day	+0.7%	Our Yahoo Finance pull
Reais per dollar, Oct 22 vs Oct 26	5.050 to 4.993	Our Yahoo Finance pull

The market voted on October 5, and it voted Bolsonaro

Round one was supposed to be Lula's. He went into it leading polls, and Flavio Bolsonaro, the former president's son, finished first instead.

The money did not wait for round two. In one session, Brazilian bank Itau gained 15.5%, digital bank Nubank 13.0%, the EWZ ETF 12.5% and Petrobras 11.5%. The Ibovespa, Brazil's main index, rose 7.7% in local points.

For scale: the S&P 500 ETF rose 0.7% that day. This was not a global risk-on day. It was a single-country election bet, placed by people who own a lot of Brazil.

Who wins and who loses now

Follow the money. The biggest jumps went to the banks: Itau and Nubank. Banks are the most rate-sensitive, most policy-exposed names in Brazil, and they are where foreign funds park a "Brazil is about to get market friendly" bet.

Petrobras is the odd one. It was up 11.5% on the day and 20.8% from October 2 to Friday's close, the best run in our set, even though the state oil company is exactly where a Lula government has the most say. That tells you oil and dividends moved it more than the ballot did.

MercadoLibre gained 9.7% on the day and then gave back a chunk: it closed Friday up 6.7% from October 2. Nubank and EWZ held almost all of their gains, at 12.9% and 11.5%. Nobody sold the Bolsonaro trade in the three weeks before the vote, even as runoff polls showed a coin flip.

The real did not get the memo

The usual script says a left-wing win in Brazil means a weaker real. On October 1 a dollar bought 5.223 reais. After the round one surprise it dropped to 4.997, a 4.3% jump for the real.

Then Lula won. The first Monday quote, with Asia trading and Europe opening, is 4.993 reais per dollar: slightly stronger than the Bolsonaro high, and 1.1% stronger than Thursday's 5.050. Nobody has proven why yet, but the pattern says the currency is pricing the end of uncertainty, not the name of the winner.

Our read on what the "Bolsonaro trade" really was

Here is the bet we are making in public. The October 5 rally was a relief trade dressed as a political one. Brazil was cheap, foreign money was underweight, and a surprise gave everyone an excuse to buy at once.

If we are right, Monday's open in New York is a shrug for the real and a modest giveback for the banks, not a crash. If we are wrong, EWZ gives back most of the 12.5% and the analysts who called it a Bolsonaro premium get to say so. Either way, the data file below has every daily close so you can score us.

One risk is live: Flavio Bolsonaro says he will ask the courts to annul the vote over a two-hour voting extension, per The Rio Times. Markets hate a contested result far more than they hate any single candidate. Watch the electoral court, not the campaign speeches. The fourth Lula term starts in January 2027.

By the numbers: how much of the rally is still on the table

Here is the scorecard from the October 2 close to the last US close before the runoff, Friday October 23. It is the money that is exposed when New York opens.

Asset	Oct 2 to Oct 5	Oct 2 to Oct 23	Share of the jump still held
Itau (ITUB)	+15.5%	+12.6%	About 81%
Nubank (NU)	+13.0%	+12.9%	About 99%
EWZ	+12.5%	+11.5%	About 92%
Petrobras (PBR)	+11.5%	+20.8%	More than all of it
MercadoLibre (MELI)	+9.7%	+6.7%	About 69%
Ibovespa (points)	+7.7%	+6.8%	About 88%
S&P 500 (SPY)	+0.7%	-1.3%	Not an election trade

Read the last column as a gauge of conviction. Nubank holders kept almost every cent of the bet for three weeks, while polls turned into a toss-up. That is either a market that never believed the Bolsonaro story mattered, or a market that never checked the polls. We lean to the first.

Two plain-English notes. EWZ is a US-listed fund that holds big Brazilian stocks, so it moves with both the stocks and the real. A stronger real lifts EWZ in dollar terms even if Sao Paulo prices stand still, which is one reason a firm currency on Monday matters more than any speech.

What to watch this week

First, the Monday open in New York for EWZ, Nubank and Itau. A drop smaller than the October 5 jump says the rally was relief, not politics. Second, the electoral court's answer to the annulment request: a fast dismissal is the bullish case. Third, the real. If it stays under 5 per dollar, foreign money is staying put, whoever sits in the Planalto palace.

The data file has every daily close since September 1, so you can rerun the scorecard yourself after the open.

What this means for you

If you own EWZ, Nubank, Itau or MercadoLibre, you are holding a bet that was placed on a result that did not happen. Check how much of your position is that one day of gains, and decide on purpose whether you still want it. For more money-meets-tech pieces like this, see Tensorust News, the deep tech and finance hub, our economics archive and our piece on prediction markets vs regulators.

Want the filings instead of the headlines? Company Watch tracks EDGAR filings (Nubank and Petrobras file 6-Ks there), federal contracts and lobbying for the companies you name, and emails you when something moves. We keep fixing it at no extra cost until it does what it promises.

Not financial advice. Our numbers and our read, so you can check them.

Sources

• Latin Times, Lula wins Brazil's runoff (TSE count), Oct 26 2026
• The Rio Times, Brazil runoff loser refuses to concede, Oct 26 2026
• Reuters, Brazil election live, Oct 25 2026
• Yahoo Finance daily closes for EWZ, NU, MELI, PBR, ITUB, ^BVSP, BRL=X, SPY, our pull Oct 26 2026 (data.csv)