Stock Market Today

So maybe pollsters aren’t irrelevant after all. Despite just an ~20% chance of victory according to Polymarket and Kalshi, President Luiz Inácio Lula da Silva came from behind to win Brazil’s presidential runoff on Sunday, taking 51.76% of the vote to 48.24% for Flávio Bolsonaro, per the Financial Times.

The polls though had called it a statistical dead heat. Datafolha’s final survey had the race tied at 50% each, and the average of final polls gave Bolsonaro a narrow 50.9% to 49.1% edge, per Newsweek. That’s well within the margin of error, and a long way from the roughly 4-to-1 odds prediction markets gave Bolsonaro.

It’s also a first. No first-round runner-up had won the presidency since Brazil restored elections in 1989, and Lula turned Bolsonaro’s 2.2 million-vote first-round lead into a 4.4 million-vote margin, per the FT.

Markets aren’t taking it well. The iShares MSCI Brazil ETF (EWZ) is down over 17% in overnight trading. Traders had piled into Brazilian assets on hopes that Bolsonaro would be more committed to cutting spending. Lula has promised a fiscal adjustment without saying how he’ll deliver it, and has made clear he won’t sacrifice his social agenda to satisfy markets. He’ll also face a more hostile Congress after conservative parties made sweeping gains in this month’s congressional elections, per the FT.