As expected, far-right candidate Jair Bolsonaro won the first round of the Brazilian presidential election last Sunday. Yet his comfortable lead surprised on the upside (46% of the votes, close to 17pp above runner-up Fernando Haddad) as it had been underestimated by polls. In addition, Bolsonaro increased his number of seats by +44 in the lower house of Congress and now holds 10% of total seats. Markets, who had already priced in his lead, still reacted positively to the unexpected Congress renewal rate and conservative breakthrough. On the day after the election, the Brazilian stock market index gained +4.6% and the BRL +1.6% against the USD, as Bolsonaro reaffirmed his pro-business policy platform. Providing he avoids making a series of mistakes in debates and TV interviews, he is best positioned to win the second round on 28 October against Haddad. The latter, former President Lula’s designated candidate, plans to eliminate the fiscal spending cap and overturn the recent labor market reform, unnerving markets. He will struggle with his party to make moves towards the center. However, in case of a Bolsonaro victory, concerns about governability and stability of his policy platform remain.