Brazil markets tumble after Lula win as AI earnings loom

Brazil markets plunge on Lula victory

Brazil's leftist leader Luiz Inacio Lula da Silva clinched a surprise second-round victory over right-wing challenger Flavio Bolsonaro — the son of imprisoned former president Jair Bolsonaro — though the defeated candidate has vowed to contest the results. The Sao Paulo stock exchange nosedived 13.7 percent to reach a near two-month low, while the national currency shed approximately 8.5 percent against the dollar as trading commenced.

"Instead of fiscal consolidation under Bolsonaro, Brazilian assets are instead going to have to contend with Lula's campaign pledges, including a shorter working week," said Chris Turner, global head of markets at ING bank. The sharp downturn reflected investor anxiety over potential policy shifts, with losses moderating only slightly by the closing bell.

Tech sector braces for crucial earnings

Global investors pivoted toward the technology sector as major artificial intelligence companies prepared to report quarterly results, with Microsoft, Alphabet and Amazon set to face intense scrutiny over their massive infrastructure investments. "The AI complex remains under a microscope ahead of what may be the most important stretch of earnings season so far," noted Stephen Innes, head of trading at SPI Asset Management.

Innes said investors want proof that "the billions going into the compute buildout are building a durable earnings machine or just a shinier version of the same old capex furnace." Meta Platforms separately announced plans to raise $35 billion through a stock offering to fund its AI ambitions, with an additional $60 billion offering planned at a later date, though its shares still declined 1.88 percent by the close.

Anthropic, a leading AI firm, revealed intentions to go public in mid-November after reporting first-half revenue surged roughly 1,300 percent year-over-year, even as it highlighted associated safety risks in its regulatory filings.

Wall Street edges higher ahead of rate decisions

Wall Street's main indices closed higher on Monday, with the tech-heavy Nasdaq Composite gaining 0.8 percent and the Dow Jones Industrial Average adding 0.3 percent, though analysts warned the recovery remained fragile. "Tech is once again mounting an attempt to rally, like a battered prize fighter getting up off the floor," said Chris Beauchamp, chief market analyst at IG, adding that "this bounce will be sorely tested in the days to come."

Jose Torres of Interactive Brokers said investors were "embracing risk" after recent turbulence provided cheaper entry points for technology exposures. European markets finished higher across the board while Asian indices ended mixed, with Tokyo's Nikkei 225 shedding 0.8 percent.

Oil prices hovered near six-month highs amid supply concerns heading into the Northern Hemisphere winter, with Brent North Sea crude trading at $115.81 per barrel and West Texas Intermediate at $101.76. Central bank decisions loom large this week, with the US Federal Reserve, European Central Bank and Bank of Japan widely expected to hold rates steady, while the Bank of England is anticipated to raise borrowing costs following a spike in UK inflation.