Brazilian stocks rose sharply Monday after far-right presidential candidate Jair Bolsonaro left his opponents in the dust in the first round of voting.
The benchmark Brazilian Bovespa index gained 4.6 percent on Monday. The iShares MSCI Brazil exchange-traded fund (EWZ) jumped 6.74 percent its biggest one-day gain since May 19, 2017, when it rose 6.75 percent.
Bolsonaro garnered 46.7 percent of the votes in Sunday's first round, much more than any other candidate. Former Sao Paulo Mayor Fernando Haddad, the candidate came in second with 28.5 percent.
Polls leading up to Sunday's vote predicted a Bolsonaro victory, but the former army captain far outperformed those forecasts. A second voting round will be held Oct. 28 because no candidate received more than 50 percent.
"This is very similar to the U.S. election in 2016," said Danilo Kawasaki, chief operating officer at Gerber Kawasaki. "You had a far-right candidate come out of nowhere and win."
Kawasaki also said "the stock market doesn't want Haddad's Workers' Party in power," noting a victory for Haddad would lead to a sell-off in Brazilan equities.
Investors have recently cheered Bolsonaro because they favor his economic platform. Throughout his campaign, Bolsonaro said he wants the Brazilian central bank to be more independent and to privatize state-run companies. Bolsonaro has also promised to take a tough stance against corruption. Meanwhile, investors fear a Haddad victory would maintain the types of policies that that have pressured Brazil's economy.
Haddad became the Workers Party candidate after a court banned former President Luiz Inacio Lula da Silva from running again. Da Silva, better known as Lula, is serving a 12-year sentence for corruption. Lula's government — along with that of Dilma Rousseff, his successor — led to a ballooning fiscal deficit and contributed to an unsustainable pension system.