Why Are Brazil Stocks PBR, VALE, EWZ in the Spotlight Today?


  • U.S.-listed Brazil stocks are in focus following the presidential runoff there over the weekend.
  • Lula narrowly beat out incumbent Bolsonaro in the runoff.
  • This sent some Brazil stocks down, including oil company Petrobras (PBR), but Vale (VALE) and the iShares MSCI Brazil ETF (EWZ) were up on Monday morning.
Brazil stocks - Why Are Brazil Stocks PBR, VALE, EWZ in the Spotlight Today?

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Ready for some international news? Today, Brazil stocks are trading on heavier-than-usual volume in the U.S. as investors consider the aftermath of a super-tight election. Luiz Inacio Lula da Silva, commonly known as Lula, defeated incumbent Jair Bolsonaro in Brazil’s presidential election runoff.

Consequently, shares of petroleum producer Petrobras (NYSE:PBR) declined in early trading, but iron ore producer Vale (NYSE:VALE) and Brazil-focused fund iShares MSCI Brazil ETF (NYSEARCA:EWZ) were up.

Brazil is the largest economy in Latin America, and it’s an energy-rich nation. So, there was a lot at stake with this presidential election. Lula had led Brazil from 2003 to 2010. However, he had actually been imprisoned several years ago on corruption charges.

It was a closely watched runoff, as Lula’s winning margin over Bolsonaro was less than 2%. Now, Lula is Brazil’s president-elect, but he will have to face a divided congress and, frankly, a deeply divided nation.

What’s Happening with Brazil Stocks?

If we can say one thing with certainty, it’s that the financial markets don’t like uncertainty. Therefore, perhaps it shouldn’t be surprising that some Brazil stocks are significantly higher today.

For example, shares of iron ore producer Vale were up 4% this morning. The U.S.-traded shares showed unusually high trading volume, indicating American investors may be taking a strong interest in Vale today.

Overall, it appears there was a relief rally in Brazil stocks and funds. The iShares MSCI Brazil ETF rallied 3% in early trading today. However, it’s premature for the bulls to declare victory, as Lula’s win may be contested at some point.

Moreover, not every Brazilian business was a winner this morning. Shares of Petrobas, an oil company, slid 2.5% early in the trading session today. This may be an expression of the market’s concerns about Lula’s potential policy stance toward Brazil’s petroleum market. Thus, the impact of Lula’s victory is mixed, but generally viewed as bullish so far for Brazil stocks.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2022/10/why-are-brazil-stocks-pbr-vale-ewz-in-the-spotlight-today/.

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