Morning bid: Lula land
SPY•Brazil’s President Luiz Inacio Lula da Silva won a fourth term, contrary to forecasts, after investors had backed Flávio Bolsonaro. Markets also face a week of major technology earnings and central bank meetings, with Brent crude near $115 a barrel on Monday.
1. Brazil election surprise
President Luiz Inacio Lula da Silva won a fourth term in Brazil, confounding forecasts that right-wing candidate Flávio Bolsonaro would prevail. Investors had bid up Brazilian stocks, bonds and the real in recent weeks on expectations of spending cuts, deregulation and closer ties with Donald Trump’s White House. Brazilian stock ETFs were set to reverse gains of 10% to 15% made since the first round of voting.
2. Markets face busy week
Microsoft, Alphabet and Amazon are among the companies reporting earnings this week, alongside a third of S&P 500 firms. Stocks ended Friday in the red after a bruising week, while Wall Street futures were slightly higher on Monday. Brent crude, which had recorded its highest weekly close in four years, eased to around $115 a barrel.
3. Central banks in focus
Markets are watching policy meetings this week at the Federal Reserve, European Central Bank and Bank of Japan, all expected to hold rates steady. The Canadian and New Zealand central banks are likely to raise rates again. French debt markets also found some relief after Moody’s did not cut the country’s sovereign rating as expected.
