Brazilian assets sold off overnight after Luiz Inácio Lula da Silva won a fourth term as president. The iShares MSCI Brazil ETF fell over 20%, and U.S.-listed Brazilian stocks dropped premarket. Neocloud stocks also slid after a warning from Elon Musk.
The iShares MSCI Brazil ETF (EWZ) fell over 20% overnight after Lula's election win, which could signal the biggest one-day drop in the ETF's history. Brazilian Real November futures fell 10% in Asian trading, according to CNBC.
Brazilian shares fall premarket
U.S.-listed shares of Brazilian companies also dropped before the open. Petrobras was down over 20%, Itaú Unibanco almost 30% and Ambev 19%.
Lula won an unprecedented fourth term in a comeback from a first-round vote that saw him trailing Senator Flávio Bolsonaro. Bolsonaro has refused to concede and says he will seek the annulment of the outcome, Reuters reported.
Markets had seen Bolsonaro as the more market-friendly candidate, with expectations that he would push for fiscal austerity and deregulation. Lula will have to convince markets he can stabilize the debt trajectory, CNBC said.
Musk targets neocloud stocks
Neocloud stocks took another blow overnight. Elon Musk warned on X that the beaten-up group faces a "guppy-level death", according to CNBC.
His comments sent shares of CoreWeave, Nebius and IREN deep into the red in premarket trading. Each stock is already down over 30% in October as credit investors pushed yields to distressed levels, doubting the business model of using aggressive levels of debt to build data centers.
Central banks and tech earnings loom
Rate decisions are due this week from the Federal Reserve, the European Central Bank and the Bank of Japan, and all are expected to hold rates this quarter. Alphabet and Microsoft report on Wednesday, and Amazon follows on Thursday.
Source: CNBC
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