Brazil Markets Advance on Signs Bolsonaro Won’t Contest Lula’s Victory

A press official for Lula’s Workers’ Party said Bolsonaro’s top aide, Ciro Nogueira, offered a meeting place for transition teams

Pressure has grown on Bolsonaro to acknowledge the election’s results after close allies and global leaders including US President Joe Biden congratulated Lula on his win.
By Simone Iglesias and Andrew Rosati
November 01, 2022 | 12:55 PM

Bloomberg — Brazil’s stocks (IBOV) and its currency rallied on signs that President Jair Bolsonaro’s administration is preparing for an orderly transfer of power after losing Sunday’s election to Luiz Inacio Lula da Silva.

The president’s communications chief said that Bolsonaro won’t contest the election, according to Reuters. Meanwhile, a press official for Lula’s Workers’ Party said Bolsonaro’s top aide, Ciro Nogueira, offered a meeting place for transition teams from the outgoing and incoming administrations.

That would be a relief for investors who have been waiting for the incumbent, who had cast doubt on the integrity of the election during campaigning, to concede defeat.

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Jair Bolsonaro, Brazil's president, speaks to Ciro Nogueira, Brazil's chief of staff.dfd

“I think a lot of the ‘contested outcome’ risk will be lifted off Brazil,” said Brendan McKenna, a strategist at Wells Fargo in New York.

Brazil’s real (BRLUSD) erased earlier losses to strengthen 1.5% to about 5.1 per dollar at 1:10 p.m. local time, leading gains among major currencies for a second session. The Ibovespa stock index climbed 0.8%.

To be sure, Bolsonaro, who is meeting with members of the armed forces and allies in Brasilia, has yet to publicly comment on the vote, almost 48 hours after losing the closest presidential contest in Brazil’s modern history.

Pressure has grown on Bolsonaro to acknowledge the election’s results after close allies and global leaders including US President Joe Biden congratulated Lula on his win.

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Concern had grown about turmoil surrounding the election after truckers blocked more than 400 roads around the country last night to protest the results. Police were working to clear the demonstrations at mid-day on Tuesday.

Supporters of the president snarled traffic overnight, including around the capital Brasilia and Brazil’s biggest city, Sao Paulo, where 25 flights at the international airport were canceled. Latin America’s largest nation depends on its roadways for commerce. Experts say that over 65% of all goods are transported by land, and that continued stoppages can quickly ripple through the economy.

The demonstrations prompted Supreme Court Justice Alexandre de Moraes to order the federal highway police to clear the blockades, warning of fines reaching 100,000 reais ($19,306) per hour per vehicle. Industry groups and the federation of truckers, which represents the nation’s biggest transportation companies, were quick to disavow the demonstrations.

“Bolsonaro is too isolated to successfully challenge the results,” said Mario Braga, an analyst with Control Risks in Sao Paulo. While demonstrations by truck drivers and supporters allow him to create a narrative that he has broad backing, “the conditions for him to stay in power simply aren’t there.”

Bolsonaro’s economic team hasn’t received guidance about the process for handing over power, according to people with knowledge of the matter who asked not to be identified because they weren’t authorized to speak publicly. Economy Minister Paulo Guedes hasn’t commented since Sunday’s election.

The Economy Ministry said in a written response to questions that it is up to the chief of staff’s office to coordinate the transition and send along any information request to the ministries.

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While Bolsonaro hasn’t publicly conceded, “the transition is pretty much set in stone already,” said Patrick Esteruelas, the head of research at Emso Asset Management.

-- With assistance from Maria Eloisa Capurro, Vinícius Andrade and Martha Beck

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