Brazilian assets may be hit by fresh volatility on Monday after supporters of former President Jair Bolsonaro stormed key government buildings, echoing the U.S. Jan. 6 insurrection of 2021, analysts said.
Images of the coordinated invasion on Sunday afternoon, which overwhelmed law enforcement and left the Supreme Court building and other locations with severe internal damage, shocked onlookers, including those from the financial industry., said he expects markets to react with volatility in the short term, especially on Monday, given the higher institutional risk. "The end of polarization seems to be far and may drain the new government's energy," Lacerda said.
But the real and Bovespa performed better on Friday after Lula said the country may grow while keeping government finances in check. Carlos Eduardo Furlanetti, professor at FIA Business School, expects that a strong reaction from the institutions, including Congress and the Supreme Court, supporting the president may even help the Lula government politically in the medium term.
Carla Argenta, chief economist at CM Capital, points out that the Brazilian rioters were helped by lenient law enforcement in Brasilia, something that didn't happen in the U.S. Capitol and that adds to the perception of political risk in the country. But that may be reversed if the institutions show unity against the Brasilia invaders, she added.
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