Brazil's stock exchange halts trading after the Ibovespa falls 10% as markets slump on Lula's re-election

As of 1:40 p.m. ET, Oct. 26, 2026

Trading on Brazil's stock exchange was halted for 30 minutes on Monday after the benchmark Ibovespa index fell 10% from its previous close, triggering the market's circuit breaker, exchange operator B3 said in a statement, Reuters reported. The selloff came a day after President Luiz Inácio Lula da Silva won re-election in Sunday's runoff.

The halt covered cash equities, private fixed income, stock options, BDRs (Brazilian depositary receipts), ETFs and several indexes including the Ibovespa, according to Reuters' Portuguese-language service. B3 said it would announce when trading would reopen, Reuters said. Under B3's rules, if the decline reaches 15% once trading resumes, trading is halted again for one hour, and if it reaches 20%, B3 can suspend trading for a period it decides, according to Reuters.

Real, futures and bonds

The real tumbled nearly 12% against the U.S. dollar in early spot trading, one of its biggest daily moves on record, while Ibovespa futures fell nearly 15% and interest-rate futures rose, Reuters reported.

Before the halt, B3 had widened daily trading limits for Ibovespa futures, dollar futures and interest-rate futures, Reuters reported. For Ibovespa futures, the exchange widened the lower limit from 10% to 15% before the open and then to 20% after trading began, a decision that also covered mini contracts, according to Reuters' Portuguese-language service. At about 10:10 a.m. Brasília time (9:10 a.m. ET), the December Ibovespa futures contract was down 16.74% at 173,260 points, Reuters reported.

The selloff also hit Brazil's sovereign debt, with longer-dated bonds hit hardest and the 2056 maturity down around 2.5 cents, according to Reuters. Brazil's five-year credit default swaps, a measure of the cost of insuring against a sovereign default, rose to 151.67 basis points from Friday's close of 120.21, Reuters reported, citing S&P Global Market Intelligence data.

Treasury cancels auctions

Brazil's Treasury cancelled its regular auctions of inflation-linked and fixed-rate government bonds scheduled for Oct. 27 and Oct. 29, Reuters reported. It kept a Tuesday auction of bonds linked to the benchmark Selic interest rate, the Treasury said in a statement, according to Reuters. "The National Treasury will continue monitoring market conditions and will act to ensure the proper functioning of the government bond market and other related assets," the Treasury said, according to Reuters (translated from the Portuguese by GROKsiNEWS.com).

Why markets moved

The drop reversed a rally earlier this month, when markets rose on expectations of a shift to the right after Sen. Flávio Bolsonaro unexpectedly finished first in the opening round, Reuters reported. Prediction markets had indicated a Bolsonaro win, with Kalshi pricing in a more than 75% chance of that on Friday, according to Reuters. Bolsonaro's refusal to concede and his pledge to seek an annulment added to investor uncertainty, Reuters said.

"The key signal for markets will be the next Lula administration's commitment to fiscal discipline, starting with the appointment of a new finance minister in coming weeks," Graham Stock of RBC BlueBay Asset Management told Reuters.

What is not known

It was not clear in the reports reviewed for this story when cash trading resumed or where the Ibovespa stood afterward. GROKsiNEWS.com did not locate B3's statement on its website. Investors are watching for Lula's choice of finance minister and what it signals about his fiscal approach, Reuters reported.