Brazil’s stock market lost more than $200 billion in value at Monday’s open after President Luiz Inácio Lula da Silva defeated Senator Flávio Bolsonaro in Sunday’s runoff election, a result that prediction markets had assigned roughly a one-in-five chance. The report was published by Decrypt.

The iShares MSCI Brazil ETF (EWZ), a basket of Brazilian stocks that trades in New York as a single share, fell as much as 26% from Friday’s close of about $42.60. The fund touched $31.40 before reducing its loss to about 23%, trading at $32.84 by 10:38 a.m. ET.

The move represented unusually sharp volatility for a fund built around Brazil’s largest companies. Despite the decline, EWZ was roughly at the level where it began 2026, after gaining 34% through Friday.

The dollar rose as much as 12% against the Brazilian real on Friday, while the Ibovespa, Brazil’s benchmark stock index, fell as much as 17% to about 170,000 points. For a dollar-based investor, those moves combined to produce a worst-case loss of about 26%, consistent with EWZ’s low.

B3, the São Paulo exchange, halted trading for 30 minutes after the Ibovespa fell 10% from Friday’s close. It was the exchange’s first circuit breaker since the COVID-19 pandemic. A circuit breaker is an automatic trading pause designed to slow panic selling, although the index continued to decline after trading resumed.

Under Brazilian electoral law, a runoff is held when no candidate wins a majority of valid votes in the first round, with the top two finishers advancing to a second ballot. Investors had positioned for the opposite result after Bolsonaro unexpectedly finished first in the Oct. 4 first round, receiving 47.03% of valid votes compared with Lula’s 45.16%, short of the majority needed to win outright. The Ibovespa rose 7.85% the next day, and EWZ gained more than 10% on expectations that Bolsonaro would tighten public finances and create room for lower interest rates. Monday’s decline erased that rally and, at its low, left the Ibovespa about 11% below its Oct. 2 close. The reversal, from a nearly 8% single-day rally to a double-digit drawdown in roughly three weeks, showed how tightly Brazilian assets had been trading around the election outcome.

Lula’s victory also contradicted the probabilities indicated by prediction markets. Polymarket gave Bolsonaro an 82% chance of winning the day before the vote, while Kalshi put his odds near 80% on Sunday morning. Both platforms are prediction markets in which a contract paying $1 if a candidate wins trades at 80 cents when traders assess an 80% probability of victory. The final tally landed far closer to the near-tie described by pollsters than to the heavy favorite status the platforms assigned to Bolsonaro.

Polling had suggested a close contest rather than a clear favorite. The latest Datafolha survey showed the candidates tied at 50% each among valid votes, while a CNT/MDA poll in mid-October gave Bolsonaro a 50.5% to 49.5% lead. Lula ultimately won 51.79% to 48.21%, a margin of about 4.4 million votes, according to Brazil’s Superior Electoral Court.

Bolsonaro said Sunday night that he does not recognize the result and will ask the courts to annul the election, despite having pledged in August to respect the outcome. He objected to Supreme Court Justice Cristiano Zanin’s decision to extend voting until 7 p.m. at the request of Lula’s campaign, arguing that it changed the rules midgame. Bolsonaro’s campaign had separately requested additional voting time in parts of three states. Any such challenge would go before Brazil’s electoral courts, where the Superior Electoral Court, the same body credited with the official tally, serves as the highest authority for presidential election disputes, making its handling of the case the next procedural step to watch.

“It is impossible to recognize the result of the elections in the context in which these things happened,” Bolsonaro said in Portuguese outside his campaign headquarters in Brasília. “We will use our legal team, we will ask for the annulment of these elections.”