Brazil's stock market triggered its circuit breaker mechanism for the first time in more than six years.

On October 26 local time, Brazil's financial markets experienced severe volatility, with major stock indices falling sharply and the Brazilian stock exchange triggering a circuit breaker. This was the first time the Brazilian stock market had triggered a circuit breaker since March 2020. On the morning of that day, Brazil's main stock index, the Ibovespa, fell 10% from the previous trading day's close, triggering the circuit breaker mechanism, and trading in stocks and related assets was suspended for 30 minutes. After trading resumed, the index continued to decline, with intraday losses at one point exceeding 17%. Affected by the market volatility, Brazil's foreign exchange market also saw significant turbulence. The USD/BRL exchange rate rose intraday to as high as about 5.6 reais per U.S. dollar. At the same time, Brazil announced the cancellation of fixed-rate government bond and inflation-linked government bond auctions originally scheduled for this week. It is understood that Brazil's stock market circuit breaker mechanism was established in 1997 to ease severe market volatility through temporary trading halts. The mechanism was activated during periods such as the 1997 Asian financial crisis and the 2008 international financial crisis. The last time a circuit breaker was triggered was in March 2020, when, hit by the COVID-19 pandemic, the Brazilian stock market triggered circuit breakers six times in one month. Including this time, the Brazilian stock market has triggered the circuit breaker mechanism a total of 24 times.