Brazilian equities surge following Bolsonaro's strong first-round showing

A decisive Bolsonaro victory in the October runoff would likely cement the current rally, though the magnitude of follow-on gains would depend on whether his policy agenda (fiscal reform, deregulation, infrastructure spending) meets or disappoints market expectations set during the campaign.

If polling tightens or the runoff remains genuinely competitive, the initial equity surge could stall or reverse as investors reassess tail risks and reduce conviction in a Bolsonaro outcome, potentially triggering profit-taking in cyclical and policy-sensitive sectors.

A Lula victory or a contested result that triggers political instability or legal challenges would plausibly trigger sharp outflows from Brazilian equities and currency weakness, as markets would reprice away from the pro-business policy expectations that drove the initial rally.