Brazilian stock and currency ETFs fell sharply after Lula's election win, with the real slipping 5% and U.S. dollar rising 5% against it. The outcome upended market bets on fiscal discipline and reduced borrowing costs.
Lula's victory came after a social media campaign, the 'Exército do Lula,' mobilized millions, flipping the election outcome. The group's influence was key in swaying voters, especially young ones, and outpaced Bolsonaro's campaign in online presence.
Goldman Sachs analysts note that Lula's administration is unlikely to implement broad structural reforms, focusing instead on maintaining state-controlled companies and fiscal sustainability. Investors will closely watch the selection of the finance minister and the transparency of campaign spending.
The election result highlights the role of social media in Brazilian politics, with Lula's campaign leveraging a digital 'army' to counter Bolsonaro's influence, marking a significant shift in the country's political landscape.