Analysts at ANZ explained that Brazilian assets were under the pump overnight.
"Brazil assets were under the pump overnight amidst a political crisis that engulfed the President as accusations of illegal payments to buy silence came to markets’ attention.
Brazil’s real recorded the largest fall since 2008 (8%, though it has risen 20% in the prior 18 months). This occurred despite the central bank intervening to support the economy.
Stocks were hit 10% before trading was halted. Bonds were unloved. Apart from highlighting corruption itself, it threatens to undermine the reform path (including fiscal reform) that had helped boost sentiment towards the country and this risks seeping into the broader region."