Lula Wins Fourth Term as Brazil ETF-Linked Contract Falls 27%

Brazilian President Luiz Inácio Lula da Silva won a fourth term in Sunday's runoff, while early derivatives trading signaled pressure on Brazilian stocks and the real ahead of Monday's local market open.

Lula won 51.8% of the vote in the runoff. The result upended market bets on a Bolsonaro victory.

On Hyperliquid, a perpetual contract tied to the iShares MSCI Brazil ETF (EWZ) fell as much as 27% before the U.S. stock market opened. The contract is a crypto-market derivative linked to a U.S.-listed fund holding Brazilian stocks; its move is separate from trading in the ETF's shares.

CME Group currency derivatives pointed to about 5.55 Brazilian reais per U.S. dollar. That was a futures-market signal ahead of the domestic currency market's reopening, rather than a price established in onshore trading.

Brazilian stocks and bonds may face selling pressure when local trading starts. A sufficiently steep fall in shares could activate stock-market circuit breakers. Brazilian assets had rallied after the first round as investors positioned for Bolsonaro; Monday's regular trading will show how much of the early repricing carries through.