Brazil's markets set for sharp sell-off after Lula's reelection

NEW YORK/BRASILIA/LONDON — Brazilian markets were set for a sharp sell-off on Monday after Luiz Inacio Lula da Silva's reelection, upending investor bets on a right-wing victory and putting the president's fiscal plans back under scrutiny. November futures for the Brazilian real were down more than 10 percent, while the iShares MSCI Brazil exchange-traded fund fell 26 percent in premarket trade. Brazil's international debt also sold off, with some long-dated bonds slipping more than 2 cents. Markets rallied earlier this month on expectations of a shift to the right after Flavio Bolsonaro, the son of former President Jair Bolsonaro, unexpectedly finished first in the opening round of Brazil's presidential elections. Stocks closed on Friday almost 7 percent above their level before the first round, while the real was nearly 5 percent stronger against the U.S. dollar. Interest-rate futures had also reflected expectations that tighter fiscal policy under Bolsonaro would allow borrowing costs to decline. "We expect a sharp market reaction on Monday, with aggressive repricing, a sell-off in a