Brazil holds a runoff election between President Dilma Rousseff and candidate Aecio Neves on Sunday.

Polls show Rousseff with a small but surmountable lead in the polls. The Brazilian market would prefer change and that may have some small spillovers into the global risk trade early in the week. If the results are close the forex market may open for the week before we know a clear winner.

Last week, Brazil’s Bovespa index was down 6.79% despite the massive rally in virtually every other equity index around the globe. Signs of relief came in a 2.4% rally on Friday.

There may be a slump on Monday if Rousseff is reelected but no matter who wins, expect the index to begin to turn play catch up with other markets by mid-week.



At worst, you might see something like the 2012 US Presidential election where the market slumped nearly 6% in the 7 sessions following Obama’s re-election followed by a non-stop rally through year-end.

At the same time, the market will also be digesting the results of the ECB’s stress test/AQR.