Brazilian stocks soar as Bolsonaro emerges as election favorite - Semafor

Brazilian stocks surged Monday after Flávio Bolsonaro emerged as the presidential frontrunner following first-round voting, with investors betting the right-wing candidate would win with a large enough majority to push fiscal reform.

“The conditions have never been this favorable,” an asset manager told Bloomberg, after Bolsonaristas won up and down the ballot Sunday, strengthening a potential Bolsonaro presidency that could target major spending cuts, bolstering the case for lower interest rates: Brazil has some of the highest rates in the world, which are partly to blame for the slowing economy that has weakened the incumbent.

Still, “neither candidate will have a free hand” on spending, given the difficulty of getting reform through the Brazilian Congress, a macro strategist told the Financial Times.