Brazilian markets experienced significant declines on Monday following the unexpected reelection of leftist President Luiz Inacio Lula da Silva. Lula overtook his right-wing opponent Flavio Bolsonaro in the second-round vote, but Bolsonaro, the son of jailed former leader Jair Bolsonaro, has promised to contest the election results. The Sao Paulo stock exchange dropped by 13.7 percent, reaching a near two-month low, while the Brazilian real fell approximately 8.5 percent against the dollar.
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Chris Turner from ING bank noted that Brazilian assets are now facing challenges from Lula's campaign commitments, which include proposals for a shorter working week, shifting the fiscal landscape that was previously under Bolsonaro.
In contrast to the turmoil in Brazil, global investors turned their attention to artificial intelligence (AI) technology companies. This week is significant for market participants as it involves critical central bank decisions and earnings reports from major tech firms. Stephen Innes from SPI Asset Management remarked that the AI sector is closely watched, particularly with upcoming earnings from Microsoft, Alphabet, and Amazon, stating that investors are seeking tangible evidence of sustainable earnings growth rather than just minor improvements in forecasts.
Meta, the parent company of Facebook and Instagram, announced plans to launch a stock offering aimed at raising $35 billion for its AI initiatives, alongside a potential additional $60 billion offering to be scheduled in the future. Meta's shares fell by 1.88 percent by the market's close.
Meanwhile, Anthropic, a leading AI company, revealed its intent to list shares on the stock market in mid-November, reporting a revenue increase of about 1,300 percent year-over-year, although it also highlighted safety risks.
Despite uncertainties in some sectors, Wall Street's major indices saw gains on Monday, particularly the tech-heavy Nasdaq, which rose by 0.8 percent. Chris Beauchamp, chief market analyst at IG, commented on the recovery attempts in tech stocks, likening it to a battered fighter trying to rise again.