Lula's win unwound a three-week bet on Brazil overnight. Two prediction markets paid out on the count.
Stock futures edged up early Monday, and Brazil's assets fell hard.
S&P 500 futures edged higher, and Dow futures rose about 0.4%. On Friday, the Dow fell about 650 points, or 1.2%. The 10-year Treasury yield ended Friday near 5%. Brent fell about 1.4% to near $115, and gold rose to near $4,030. Bitcoin slipped back under $80,000 before the Fed, and gold went the other way. It was back near $80,300 early Monday.
U.S. futures held steady.
Brazil did not.
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Brazil's election trade came apart overnight.
Brazil's election trade took three weeks to build. It came apart in one Sunday night. President Luiz Inácio Lula da Silva won the runoff with 51.79% of valid votes, the electoral court said. Flávio Bolsonaro took 48.21%. Lula had trailed in the first round on Oct. 4. Bolsonaro refused to concede. He said he would seek an annulment over a court order that extended voting by two hours.
Markets had moved sharply in anticipation of a right-wing shift, Reuters reported. By Friday, Brazilian stocks were almost 7% above their level before the first round, and the real was nearly 5% stronger. Real futures fell 10% in Asian hours. The iShares MSCI Brazil ETF was indicated about 26% below Friday's close before the open. It is priced in dollars, so its drop includes the currency's.
Priced for a Different Winner
For three weeks, investors bought Brazil on the prospect of a right-wing shift. Stocks and the real together gained about 12% in dollars. The fund's indicated drop is about twice that. The first full session of local trading will show how much of the drop holds.
A sponsor may stay in below its own old price, and sovereign money topped a buyout bid.
Bain is said to be staying in Surgery Partners at a price below its own 2025 offer. Bon Secours Mercy Health is in late-stage talks to buy a majority stake at about $20 a share. The Financial Times reported the talks, citing people familiar with the matter. Bain Capital, which owns almost 40%, would keep its stake. Bain proposed $25.75 a share in January 2025, so the reported price is about 22% lower. The stock closed Friday at $15.75 and was quoted near $19 before the open. Neither company had commented early Monday.
Ingenia has a new suitor backed by a sovereign wealth fund, and Warburg Pincus has lost its data room access. AVID Property Group offered A5.25. Ingenia granted AVID up to six weeks of soft exclusivity. Its board has not said it will recommend the nonbinding proposal.
Who Sets the Mark
Bain would keep its stake at a price about 22% below its own bid. In Australia, sovereign-backed money bid 10 cents above Warburg Pincus. Neither deal is signed. The final terms will show what long-dated capital is willing to pay.
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Oil eased and French bonds rallied, each resting on a condition not yet met.
Oil fell as regional delegations arrived in Tehran. Iran says Hormuz won't be run the old way. Senior Saudi, Pakistani and Turkish officials were due in Tehran on Monday for de-escalation talks. On Sunday, Iran's foreign minister said the strait will not "be managed as it was in the past," Mehr News Agency reported. Houthi forces claimed a new missile attack on Riyadh's airport. The Saudi-led coalition said it intercepted a missile. Brent's drop extended into the European morning.
France escaped a Moody's downgrade, and its bonds rallied, but the rating rests on a budget that hasn't passed. Moody's kept France at Aa3 with a negative outlook on Friday. It said the rating assumes a deficit-reducing budget for 2027 will be adopted. The French 10-year yield was down 5 basis points early Monday in Paris, CNBC reported. It rose above 5% last week for the first time since 2002. S&P reviews France on Nov. 27.
Relief With Conditions
Oil eased while regional envoys headed to Tehran, even as Iran described a lasting change to the strait. French bonds rallied after a rating that depends on a budget vote. Both moves price a condition that has not been met. A failed round in Tehran or a weaker French budget would test them first.
Two Brazil contracts paid on the count, and an Iran contract dropped and recovered with no confirmed strike behind it.
Polymarket priced a Bolsonaro win near 81 cents at 1:47 p.m. Sunday, and Kalshi near 82 cents. The final polls had the race within the margin of error. Polymarket's price slid after the voting extension, and both fell to near zero as the count turned. Kalshi's market closes once a winner is announced. It settled at No at about 9:09 p.m. ET, before Bolsonaro called for an annulment. Polymarket's data showed its contract resolved No by early Monday.
Polymarket's Iran ceasefire contract fell sharply on Sunday evening. By morning, it was all back. The Oct. 31 contract slid from 84.5 cents to as low as 69 cents between about 5:40 and 6 p.m. Sunday. It was near 85.5 cents early Monday. No cause for the drop has been established. A claimed strike on a Sirik launcher was relayed after 6 p.m., as the contract was already recovering. No U.S. official confirmed it. The contracts turn No only on a qualifying U.S. strike on Iranian territory.
A Count and a Claim
Brazil's contracts settled on an official count, with a legal challenge still pending. The Iran contract dropped before a strike claim was relayed, and no official confirmed one. It gave the move back by morning. In both cases, the rules decided what counted.
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Monday opens with firmer U.S. futures and a Brazil selloff.
Lula's win unwound a three-week trade and settled two contracts. A sponsor may stay in below its own old price. Oil eased and French bonds rallied, each resting on a condition not yet met. The Fed decides Wednesday, Big Tech reports Wednesday and Thursday, and GDP and inflation data arrive Thursday.
Capital moves early. Coverage catches up. The gap between the two is worth watching.
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