Fearful investors who bought up Ibovespa puts on Friday to protect themselves in the event of a weaker-than-expected showing from right-wing pro-market candidate Jair Bolsonaro can breath a sigh of relief. In a showing that suggests he will almost certainly lock up the presidency in the second-round vote on Oct. 28, Bolsonaro won more than 46% in Sunday’s first-round vote, pummeling his closest rival, Workers’ Party candidate and Lula proxy Fernando Haddad, who walked away with barely 30%.

 

Just as they did during Bolsonaro’s advance in the polls, Brazilian assets cheered his stronger than expected first place finish as stocks and the real soared.

 

An ETF tracking Brazilian stocks surged 7.5% to its highest level since May:

 

Analysts at BAML and JP Morgan scrambled to upgrade their price targets on state-run energy company Petrobras (BAML upgraded Petrobras to a ‘Buy’ with a target of $20 a share and JPM upgraded it to ‘overweight’ at $17 a share). Other analysts opined that, assuming Bolsonaro can win over the support from at least a few center-right candidates, he should have no trouble winning the presidency and seizing control of an economy that’s mired in its worst-ever economic collapse.

Here’s a roundup of the biggest stock moves, courtesy of Bloomberg:

  • iShares MSCI Brazil UCITS ETF in London, Xtrackers MSCI Brazil UCITS ETF in Germany and Lyxor ETF Brazil (IBOVESPA) in France advanced at least 6 percent
  • Petrobras ADRs in Germany climbed 12 percent. The yield on 2025 euro-denominated bonds dropped 30 basis points, the most in about two years
  • Itau Unibanco Holding SA ADRs reserved declines to gain 3.5 percent. Ambev SA ADRs lost 1 percent
  • Banco do Brasil SA and Banco Bradesco SA ADRs added more than 1 percent
  • Mexican peso followed emerging-market peers lower. With trading in Brazil’s currency restricted to local hours, the more liquid peso is often used as a hedge for the real
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