Flávio Bolsonaro leads Lula in Brazil's presidential runoff, supreme court scandal around justice Alexandre de Moraes reshapes the race, Goldman desk logs busiest week ever as foreign capital floods in

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Jair Bolsonaro’s eldest son, Flávio, is the favourite to beat the leftwing incumbent Lula, in the second round of Brazil’s presidential elections on 25 October. Photograph: Lucas Landau/AP theguardian.com

Jair Bolsonaro supporters protest against Alexandre de Moraes in São Paulo in September 2024, a month after the supreme court justice ordered X to be suspended in Brazil. Photograph: Jorge Silva/Reuters theguardian.com

Lula greets supporters at a campaign rally in Ceilândia this month. The president told the crowd he would win the election and that Brazil would not return to fascism. Photograph: André Borges/EPA theguardian.com

How Trump is meddling in Brazil’s election – explainer theguardian.com

Alexandre de Moraes has previously been likened by Elon Musk to the Harry Potter villain Lord Voldemort. Photograph: Carla Carniel/Reuters theguardian.com

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Flávio Bolsonaro, a senator and eldest son of Brazil's imprisoned former president, beat President Luiz Inácio Lula da Silva by around two percentage points in this month's first round and leads him in the polls ahead of the October 25 runoff. A PoderData/Aya survey puts Bolsonaro at 51 percent of valid votes against 49 for Lula — a statistical tie given the 1.8-point margin of error, and a lead that has narrowed from six points in the October 8 poll — while a separate BTG Pactual/Nexus poll gives him 52 to 48, and Polymarket prices his victory at 86.5 percent.

His campaign has aimed less at Lula than at supreme court justice Alexandre de Moraes, who oversaw the case that sentenced Jair Bolsonaro to 27 years in prison for attempting a coup. "Whoever votes for Lula is voting for Alexandre de Moraes," the younger Bolsonaro told thousands of far-right supporters in São Paulo on Independence Day. The court supplied the material itself, the Guardian reports: a police investigation found that Moraes's wife's law firm held a contract worth about £20 million with Daniel Vorcaro, a banker accused of orchestrating Brazil's largest banking fraud, and text messages emerged suggesting a close relationship between the two men — messages Moraes says are not authentic. At least four other justices have been linked to Vorcaro, drawing half the court's ten members into the scandal. The crisis peaked with a ferocious exchange of insults between Moraes and another justice during a televised session, followed by weeks of rulings in which the two camps overruled one another.

Lula, who did not appoint Moraes, blamed his first-round defeat in part on having to "carry on his back … the promiscuity" of the supreme court. "In the eyes of society … he paid the price for that institutional damage," said campaign coordinator Edinho Silva. Analysts point to household debt and a preference for the younger Bolsonaro, but many agree the court crisis proved decisive among indecisive voters — the bloc that settles Brazilian elections, since the electorate divides into two similarly sized left and right camps.

Capital is not waiting for the runoff. The EWZ Brazil fund rose 12.5 percent in a single day after the first round — a five-sigma move, one in 3.5 million under Gaussian assumptions, and the first of that magnitude in the fund's history not to follow a sell-off. The Monday after the vote was a record session with $20 billion traded and the largest one-day foreign inflow on record, $2 billion; Goldman Sachs' desk called it "the busiest week ever in Brazil." Medium- and long-term rates have compressed 150 basis points in two weeks. Bolsonaro, who last week secured endorsements from four centre-right parties, still has to assemble a credible economic team, propose a deliverable fiscal plan and win congressional support for it.

At the São Paulo rally, the frontrunner devoted more of his speech to the justice who jailed his father than to the president he is running to replace.