Morning on the market: local assets face correction after Flávio Bolsonaro suggests ‘price’ for withdrawing from candidacy

The strong movement of sales of national assets caused by the pre-candidacy of Flávio Bolsonaro (PL-RJ) for the presidency should be reversed this Monday. The senator’s statements, suggesting he would withdraw from the conflict in exchange for an amnesty from his father, former President Jair Bolsonaro, confirmed the market perception that the initiative aimed to put Bolsonarism back on the political table.

In an interview with TV Record on Sunday evening, Flávio admitted that the “price” for giving up the electoral race was having his father “free, at the polls”. The possibility of negotiations arises after the fall of local markets, because this name is considered one that could increase the chances of re-election of President Luiz Inácio Lula da Silva (PT), since there is no consensus within the opposition. The agents point to the governor of São Paulo, Tarcísio de Freitas (Republicans), as a more competitive alternative for 2026.

According to the Polymarket betting site, the probability that the PT member will reach his fourth presidential term has fallen from 52% to 48%. Tarcísio de Freitas’ chances fell from 36% to 20%, but rose to 26% after Flávio Bolsonaro reinforced his desire for an amnesty vote. The chance of the senator winning the election, which was 14% at its peak, is now 10%.

The scare with Flávio caused a fall in the Brazilian stock market, which fell by 4.31% and left the “overbought” level reached after the recent euphoria that took the Ibovespa to successive historic highs. Sources heard by Value say the announcement was received with skepticism, at least initially, given the need to monitor developments. Already in the hard core of Bolsonarism, the tone is one of enthusiasm with this appointment.

In addition to the political scenario, investors will also focus this week on the monetary policy of Brazil and the United States. The market should monitor whether the expected decision to cut US interest rates will be shared, while analyzing the Monetary Policy Committee (Copom) statement for signs that could indicate a decline in the Selic in January.

In the meantime, global stock markets are operating without a single direction and the dollar is close to stability this morning. Around 8 a.m., the future S&P 500 rose 0.10% and the Stoxx 600 dropped 0.02%. The DXY, which measures the performance of the American currency against a basket of six strong currencies, lost 0.01%, to 98,982 points.