Daily Briefing | 27 October 2026: Lula’s re-election triggers sharp falls in Brazilian shares and currency; Anthropic files for an IPO; Meta plans to raise US$95 billion through an equity offering

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Today's main theme

This edition covers Monday 26 October. The main themes driving the markets on this day were ‘politics and financing’. In Brazil, following Lula’s narrow re-election victory, capital that had been betting on a win for Flávio Bolsonaro withdrew en masse, triggering the first circuit breaker on the São Paulo Stock Exchange since 2020; the Ibovespa closed down 13.88 per cent, the Brazilian real fell by more than 8 per cent against the US dollar, and Flávio Bolsonaro demanded that the election results be declared invalid. On the AI front, Anthropic publicly filed its prospectus with the US Securities and Exchange Commission, planning to list on the Nasdaq under the ticker symbol ANT; Meta announced a share capital raising plan of up to US$95 billion to fund its AI infrastructure. These two developments indicate that the sources of funding for AI are shifting from free cash flow and bonds towards the stock market. In the Middle East, senior officials from Saudi Arabia, Turkey and Pakistan travelled to Tehran to mediate; CNN reported that US forces could launch a large-scale strike against Iran within 96 hours of an order from Trump, whilst Israel held general elections today. Brent crude oil prices edged down slightly. Domestically, the onshore renminbi closed above 6.67 against the US dollar, its strongest level since June 2022.

Key News

1. Lula’s re-election triggers a sharp fall in Brazilian assets: the Ibovespa drops by 13.88 per cent, whilst the real falls by over 8 per cent

In the second round of Brazil’s general election on 25 October, according to data from the Superior Electoral Court, Lula defeated Flávio Bolsonaro by 51.79 per cent to 48.21 per cent, a margin of approximately 4.4 million votes. At the market open on 26 October, Brazilian markets plummeted. According to CNN Brasil, the São Paulo Stock Exchange (B3) triggered a circuit breaker shortly after the market opened, suspending trading for approximately half an hour – the first such occurrence since 2020; The Ibovespa index fell by more than 17 per cent at one point during the session, closing at 176,608.23 points, down 13.88 per cent – its largest single-day decline since March 2020. The property, consumer and small-cap indices all fell by more than 26 per cent. The US dollar closed at 5.406 against the real, up 8.36 per cent, having surged as much as 12.5 per cent to 5.60 at the open. Interest rate futures rose sharply, with the DI rate maturing in January 2028 closing at 14.8 per cent, up 194 basis points. According to Bloomberg, the real’s decline was its steepest in more than two decades, whilst a Brazil-focused ETF listed in New York fell as much as 26 per cent during trading; on the US stock market, according to TheStreet, XP Inc. fell by approximately 50 per cent and Nu Holdings by approximately 20 per cent. The Brazilian Ministry of Finance cancelled the government bond auction scheduled for 27–29 October and announced the repurchase of a portion of local-currency fixed-rate government bonds to stabilise the market.

The fall was attributed to the fact that the market had previously been widely betting on a Flávio victory. Following the first round of voting, the Ibovespa had risen by 7.7 per cent in a single day; a Citigroup survey of 73 fund managers revealed that 80 per cent expected a Lula victory to trigger a fall of more than 5 per cent. Flavio has pledged to cut the deficit, whilst investors fear that a fourth term for Lula would lead to further increases in fiscal spending; according to Bloomberg, Brazil’s budget deficit exceeds 9 per cent of GDP, and public debt exceeds 80 per cent of GDP. Politically, according to Bloomberg, Flávio has called for the election results to be declared invalid on the grounds that a Supreme Court justice ‘changed the rules’ by ordering a two-hour extension to polling hours.

Key points to watch: how the court will rule on Flávio’s claims; whether the Central Bank of Brazil will intervene in the foreign exchange market; whether Lula’s team can present a credible fiscal framework as soon as possible; and whether foreign capital will continue to withdraw.

Source:CNN Brasil、Bloomberg (reprinted from the Spokesman-Review)、MercoPress、TheStreet

2. Anthropic has publicly filed its prospectus, with plans to list on the Nasdaq under the ticker symbol ‘ANT’

On 26 October, Anthropic publicly filed its S-1 prospectus with the US Securities and Exchange Commission, planning to list its Class A shares on the Nasdaq under the ticker symbol ANT; the company had previously filed a confidential application in June. According to a summary of the prospectus by TipRanks and TNW, the company’s revenue for the first half of 2026 was US$16.29 billion, compared with US$1.16 billion in the same period the previous year; full-year revenue for 2025 was US$4.59 billion. The net loss for the first half of the year stood at US$80.7 billion, although approximately US$72.4 billion of this was a non-cash accounting charge arising from convertible notes as the company’s valuation rose; according to TNW, second-quarter revenue was US$11.6 billion, with the company achieving an operating profit for the first time. The lead underwriters are Goldman Sachs and Morgan Stanley, with a further 20 banks participating. The prospectus did not specify a price range or the number of shares to be issued. According to The Wall Street Journal and Reuters, citing sources familiar with the matter, the listing is likely to take place in mid-November, with a target valuation of approximately US$1.5 trillion and the potential to raise US$100 billion or more.

The prospectus also reveals key features regarding costs and governance. According to *The Wall Street Journal*, the company’s future commitments to computing power expenditure could reach as much as US$750 billion, primarily arising from cloud contracts with Google, Amazon and Microsoft; the top five clients accounted for approximately 25 per cent of revenue in the first nine months. In terms of governance, the company remains a public benefit corporation, with Class F shares held by the founders controlling 50.1 per cent of the voting rights on ordinary matters, whilst a long-term benefit trust elects a majority of the board seats via Class T shares; Class A shareholders on the open market are effectively unable to influence shareholder voting.

If the offering proceeds on its current scale, it will be one of the largest IPOs in history and will serve as a test of the market’s capacity to absorb AI companies. Key points to watch going forward include the offering price range and valuation, OpenAI’s listing timetable, and the impact of non-cash losses, computing power commitments and the dual-class share structure on pricing.

Source:TipRanks、TNW

3. Meta plans to raise up to US$95 billion through an equity offering to fund AI infrastructure

According to Reuters (as reported by Business Standard), Meta announced on 26 October a plan to raise up to US$95 billion through equity financing, describing it as the largest equity fundraising in the company’s history. Of this, approximately US$35 billion will be raised through a public offering of ordinary and preference shares; according to the *Daily Economic News*, this includes US$22.5 billion in Class A ordinary shares and US$12.5 billion in mandatorily convertible preference shares; a further US$60 billion will be raised in tranches via an ‘at-the-market’ (ATM) programme, which will commence once the new non-voting Class C shares begin trading, expected in the first quarter of 2027. NVIDIA, AMD and Broadcom have expressed their intention to subscribe for up to US$5 billion worth of Class A shares in total. Meta plans to issue Class C shares in January 2027, equivalent to a 2-for-1 stock split.

The fundraising comes against a backdrop of weakening cash flow. Meta’s free cash flow for the third quarter stood at a negative US$2.12 billion, the first negative figure in over a decade; last week, it raised the lower end of its capital expenditure forecast for the year to between US$135 billion and US$145 billion, and committed to approximately US$825 billion in future spending, primarily for data centres and computing power. As at the end of September, the company held approximately US$82.45 billion in cash and marketable securities, whilst its long-term debt stood at approximately US$80.92 billion. Meta’s share price fell by approximately 1.4 per cent in early trading that day. Earlier this year, Alphabet also expanded the scale of its share issue to US$84.75 billion.

Key points to watch: the capital expenditure guidance in this week’s earnings reports from Microsoft, Alphabet and Amazon; whether more technology companies will turn to equity financing; and the dilution effect on share prices and earnings per share resulting from large-scale share issues.

Source:Business Standard (Reuters)、Bloomberg

4. Senior officials from Saudi Arabia, Turkey and Pakistan have travelled to Tehran to mediate, whilst CNN reports that US forces could launch a large-scale strike against Iran within 96 hours

On 26 October, high-level delegations from the three signatory states to the ‘Mecca Joint Defence Agreement’ visited Tehran: According to Al Jazeera, Saudi Defence Minister Khalid bin Salman, Pakistani Chief of Army Staff Munir and Turkish Intelligence Chief Kalin met with Iranian President Pezeshizyan. The Iranian side stated that all parties agreed to continue dialogue and seek peace; the Saudi side indicated that the purpose of the talks was to open channels for negotiation and prevent a recurrence of military escalation. The talks also addressed missile and drone attacks on Saudi Arabia by the Houthi rebels. Additionally, according to Reuters, Qatari mediators also travelled to Tehran under US coordination. Pezeshizian arrived in Moscow that evening to attend the Gas Exporting Countries Forum summit and is expected to meet Putin on 27 October.

Meanwhile, according to CNN, citing two US officials, the US military has deployed sufficient forces in the Middle East to launch a new, potentially large-scale operation within 96 hours of Trump giving the order; the list of targets includes Iran’s energy, military and nuclear facilities. The officials believe the order is most likely to be issued after the US mid-term elections and before the end of the year; Trump has not yet made a decision. CNN also reported that the US has asked Israel not to act unilaterally until preparations for a joint operation are complete; Israeli Defence Minister Katz denied any disagreement, stating that Israel “has never intended to launch an attack on Iran before the general election”. US Treasury Secretary Bessent told Iran International that there are no longer any crude oil shipments from Iran’s Khalk Island, and that pressure over the next eight weeks would be “even more intense”.

Israel is holding parliamentary elections today (27 October), with Netanyahu stating his intention to work with Trump to “permanently eliminate the Iranian nuclear threat”. Key points to watch: the outcome of the Israeli general election and the formation of a new government; whether mediation by Qatar and the signatories to the ‘Mecca Agreement’ can open a channel for US-Iran negotiations; and US military decisions following the mid-term elections on 3 November.

Source:Al Jazeera、The Tribune (citing CNN)、Fox News、Reuters (reprinted by Investing.com)

5. The renminbi closed above 6.67 against the US dollar, its strongest level since June 2022

According to The Paper, on 26 October, the onshore renminbi closed at 6.6681 against the US dollar at 16:30, appreciating by 30 basis points from the previous trading day and closing below 6.67 for the first time since 8 June 2022; The offshore yuan rose to an intraday high of 6.66715, its strongest level since mid-June 2022. The yuan’s central parity rate for the day was set at 6.7162, an increase of 18 basis points, bringing the year-to-date appreciation to 4.45 per cent.

Caitong Securities believes that geopolitical tensions and risk-averse sentiment are altering the relative attractiveness of domestic and foreign assets, whilst the resilience of the domestic economy, capital inflows via the financial account and corporate demand for foreign exchange conversion are collectively driving the appreciation of the renminbi; it expects the appreciation trend to continue, though the pace may slow. In terms of market performance, according to Sina Finance, the Hang Seng Index rose by 0.51 per cent on the day, whilst PetroChina’s Hong Kong-listed shares climbed by more than 5 per cent; on the A-share market, the Shanghai Composite Index closed higher, whilst the Shenzhen Component Index and the ChiNext Index fell by more than 1 per cent. Trading volume on the Shanghai and Shenzhen stock exchanges totalled 1.61 trillion yuan, a decrease of 347.5 billion yuan compared with the previous trading day.

A stronger renminbi helps to reduce the cost of energy imports and provides some cushion against high oil prices, but it also squeezes the profit margins of exporting firms. Key points to watch going forward: the forthcoming September industrial enterprise profit figures, the direction of the US dollar following the Federal Reserve’s monetary policy meeting, and whether the central bank will adjust the pace of appreciation via the central parity rate.

Source:The Paper、Sina Finance

Market Correlation and Today's Observation

On 26 October, US shares rose, with the S&P 500 gaining 0.70 per cent to 7,676.80 points, the Nasdaq rising 0.82 per cent to 26,169.38 points, and the Dow Jones Industrial Average climbing 0.28 per cent to 52,361.52 points; The yield on the 10-year US Treasury note remained broadly unchanged at around 4.98 per cent. Anthropic’s filing of its prospectus boosted sentiment in technology shares, but Meta’s share price fell following the announcement of a share issue, indicating that whilst the market welcomes the listing of AI companies, it is willing to accept price pressure resulting from large-scale dilution. As for oil prices, mediation efforts in Tehran caused Brent crude to fall by 0.8 per cent on 26 October, closing at US$115.81, whilst WTI closed at US$101.76; the Houthi rebels’ claim of attacks on pumping stations along Saudi Arabia’s east-west oil pipeline limited the extent of the decline. The sharp fall in Brazil was largely due to domestic political and fiscal issues; whilst the spillover effect on other emerging markets remains limited for now, it will prompt investors to pay closer attention to election risks and fiscal discipline.

Looking at several news items together: the funding requirements of AI giants have become so substantial that they must be met directly by the stock market; both Anthropic’s IPO and Meta’s share placement will draw capital away from the secondary market; whilst high oil prices and the prospect of further interest rate rises by the Federal Reserve are keeping interest rates at elevated levels. For the A-share and Hong Kong stock markets, the strengthening of the renminbi and the resurgence of foreign investment in Chinese assets are providing support, but the technology sector remains subject to fluctuations in AI valuations in global markets.

Checklist:

• The results of the Israeli general election on 27 October, and progress in the US-Iran mediation efforts
• The Federal Reserve’s 28 October monetary policy statement and expectations for a rate rise in December
• Capital expenditure and cloud business growth in the financial reports of Microsoft, Alphabet (28 October) and Amazon (29 October)
• Anthropic’s offering price range and valuation, and the pricing of Meta’s share placement
• How do Brazilian courts handle election-related claims, and does the Central Bank of Brazil intervene in exchange rates?
• September’s industrial enterprise profit figures, and whether the renminbi can stabilise below 6.67

Source:TheStreet、Reuters (reprinted by Investing.com)

Cover image:Arturo Añez / Unsplash