Brazilian stocks jumped on Wednesday after an appeals court upheld a corruption conviction for former President Luiz Inacio Lula da Silva.

If Lula is barred from the election, current President Michel Temer likely has an easier path towards re-election. Temer is seen as the more market-friendly option between the two. He has also pushed for reforms to the country's pension system.

The iShares MSCI Brazil exchange-traded fund (EWZ) spiked 6.2 percent higher on the back of the news. Brazil's Bovespa index, meanwhile, rose 3.4 percent and hit an all-time high.

The EWZ also posted its biggest one-day gain since May 19, 2017.

Da Silva, better known as Lula, was convicted last year of corruption. He is also the highest-profile casualty of "Operação Lava Jato" (Operation Car Wash), a sweeping corruption investigation that has rattled Brazil.

Since its start in 2014, Operation Car Wash has led to hundreds of arrests. It also led to Dilma Rousseff's ousting as Brazil's president in 2016. Rousseff succeeded Lula in 2011.

The court's unanimous decision reduces Lula's options to appeal against the conviction. He is also likely to be declared if he tries to register his candidacy for the Oct. 7 presidential election.

Lula, who was Brazil's president for two consecutive terms, was one of the most popular Brazilian politicians in recent memory. Former U.S. President Barack Obama once labeled him the most popular politician on earth. When he left office, Lula had an 83 percent approval rating.

The former union leader won global admiration for transformative social policies that helped reduce stinging inequality in Latin America's biggest country.

—Reuters contributed to this report.