Brazilian Markets Surge on Bolsonaro Election Victory

Brazilian markets surged following right-wing challenger Flávio Bolsonaro's victory in the first round of the country's general election, though he fell short of the majority needed to unseat incumbent Luiz Inácio Lula da Silva. The New Zealand dollar hit a six-and-a-half-year low against Brazil’s real, trading at 2.7931 reais at 7am in Auckland from 2.9197 reais yesterday. The São Paulo Stock Exchange’s Bovespa Index jumped almost 9%, with Brazilian investment manager XP and digital bank Nu Holdings seeing significant gains.

Wall Street stocks continued their upward trajectory, with the tech-heavy Nasdaq Composite climbing 1.1% and the S&P 500 up 0.7%. Nvidia was on track to close at a new record, despite a rise in government bond yields. The yield on 10-year US treasuries climbed 8 basis points to 5.35%, while the kiwi dollar remained subdued, trading at 55.92 US cents.

European markets were mixed, with the UK’s FTSE 100 up 0.3% and Germany’s DAX nudging up 0.1%, while France’s CAC 40 dropped 0.8%. French central bank governor Emmanuel Moulin urged the French government to clean up its public finances, warning that Europe’s second-biggest economy risked being strangled by interest rates. Meanwhile, Spain’s prime minister Pedro Sánchez called a snap election after losing a parliamentary vote on housing measures.

Oil prices fell with Brent crude oil futures down 1.4% at US$100.80 a barrel amid reports that Yemeni forces took control of the Bab el-Mandeb Strait on the Red Sea. Saudi Aramco chief executive Amin Nasser noted that oil stockpiles were “scarily thin” and would take up to two years to rebuild after the Middle East conflict. Futures pointed to a positive start for the ASX, with the New Zealand Institute of Economic Research’s quarterly survey of business opinion being the main local data highlight.