Brazil’s real sinks after Lula’s re-election victory

JUST IN: Brazil's real sinks 12% against the dollar after Lula's re-election win, with the Bovespa triggering a circuit-breaker as investors react to fiscal and spending concerns.

The Brazilian real just fell twelve percent in a single session. Markets wanted Bolsonaro, and they got Lula.

The Bovespa dropped ten percent from Friday's close, hard enough to trigger the circuit breaker and freeze trading for thirty minutes. Stock futures tumbled nearly fifteen. And the front pages tell you why, Lula, president for a fourth time, after Flavio Bolsonaro led the first round and traders piled into the right-wing comeback story. Stocks had rallied seven percent on that bet. Today they gave it all back and then some.

It doesn't help that Flavio Bolsonaro is refusing to concede, though analysts say the margin means the result stands. The real problem is fiscal. Investors are pricing in more spending, higher rates, and Lula promising a budget surplus by 2030 that nobody fully believes in yet.

Here's the number that matters. Brazil's public debt is already above eighty two percent of GDP, and the bill for this election just arrived.

This is Sara White, reporting for HIT.