Luiz Inácio Lula da Silva was reelected as president of Brazil, defeating Flávio Bolsonaro with 51.8% of the vote compared to Bolsonaro's 48.2%. This result was surprising to many, as prediction markets had given Bolsonaro an over 80% chance of winning following the first round of voting.
Even as late as Sunday evening, Lula's odds were only 21% on Kalshi, indicating that many analysts did not foresee his victory. The prediction markets, which operate differently from traditional political polling, failed to accurately reflect the tight race that political polls indicated.
Following the election, Brazilian stocks and ETFs experienced a sharp decline, with the iShares MSCI Brazil ETF (EWZ) dropping 22%, and shares of Itau Unibanco and Banco Bradesco falling by 20% and nearly 30%, respectively. Additionally, major companies like Ambev and Petrobras saw declines of over 15%.
Bolsonaro is expected to contest the election results, which could lead to further market volatility