US Stock Market Move | Brazil Election Results Spook Markets; Brazil-Linked Assets Listed in the US Plunge

On Monday, Brazil-linked companies listed in the US plunged. Petroleo Brasileiro SA Sponsored ADR Pfd (PBR.US) fell nearly 17%, ItaUnity Bancorp, Inc. (ITUB.US) dropped over 20%, Banco Bradesco S.A. Sponsored ADR-Preferred (BBD.US) fell over 28%, Nu Holdings (NU.US) dropped over 20%, XP Inc (XP.US) plunged over 52%, and MercadoLibre (MELI.US) fell over 11%. On the news front, according to data from Brazil's Superior Electoral Court, left-wing incumbent President Lula defeated Senator Flvio Bolsonaro in Sunday's second round of the presidential election with 51.8% of the vote to 48.2%, winning an unprecedented fourth term. Previously, the market widely bet on the more market-friendly Bolsonaro winning and pushing economic reforms. Since the first round of voting, Brazilian stocks had surged nearly 7% and the real had appreciated nearly 5%. Morgan Stanley said it expects Brazilian stocks to fall 20%-30%, with wide variation in the declines. In addition, the USD/BRL exchange rate will test 5.60, and could reach 6.00 if Brazil's fiscal concerns intensify.