Flávio Bolsonaro, a senator and the son of former president Jair Bolsonaro, finished first in Brazil's presidential vote on Sunday with 47.03% against 45.16% for President Luiz Inácio Lula da Silva. Neither cleared 50%, so the two meet in a run-off on October 25.
President Milei, who backs Bolsonaro, congratulated his "dear friend" on election night for what he called a "historic election" against "the communist Lula." On Monday he posted that "a leftist communist loses to someone on the right and the markets celebrate with big gains," adding: "Leftist impoverishers, get out of the way, we are trying to make the continent shine."
The market reaction was large. The Brazilian real gained more than 4% and traded below 5 to the dollar, from about 5.22 on Friday. São Paulo's Ibovespa stock index opened about 8% higher, and Petrobras, the state-controlled oil company, rose almost 10% in pre-market trading in New York.
For Argentina, the stakes run through trade. Brazil took 12.8% of Argentine exports from January to August, more than any other country, and supplied 21.7% of imports. The car industry is the most exposed: it accounts for about 40% of trade between the two countries, according to Gustavo Pérego of the consultancy Abeceb, so Brazilian demand and the exchange rate matter more to Argentine factories than either candidate's politics.
A stronger real helps. It makes Argentine goods cheaper for Brazilian buyers and Brazilian goods dearer in Argentina. Leonardo Chialva of Delphos Investment said a stronger real takes pressure off Argentina and brings calm to the exchange rate, which he called the market's biggest fear in 2027, the year of Milei's re-election bid.
The Casa Rosada has a second goal. Milei wants to overhaul Mercosur, including a review of its common external tariff and more freedom for members to sign their own trade deals, and the government sees a Bolsonaro presidency as a window to push it. Pérego expects a Lula government to keep a distant relationship with Milei, with talks run mainly by technical teams. A Bolsonaro government could be more open to cutting trade barriers, which would expose Argentine auto-parts makers to more competition, he said.
Milei held a cabinet meeting at the Casa Rosada on Monday that also covered his legislative agenda, including a push to scrap Argentina's open primaries (PASO). Some ruling-party figures urged caution: one told Infobae the Brazilian result alone will not be enough to help Milei in 2027, because the run-off comes first.
Right-wing parties led by Bolsonaro's Liberal Party also did strongly in both houses of Congress. Lula called the result "unexpected" and said he expects to win the run-off.