Investors caught by surprise by Brazil's election

Data: FactSet; Chart: Axios/Matt Phillips Brazilian assets tumbled Monday following the re-election of Brazil's left-leaning incumbent in a presidential runoff Sunday.Why it matters: The re-election of Luiz Inácio Lula da Silva — known as Lula— underscores the economic challenges Brazil faces as the one-time union organizer heads toward his fourth non-consecutive presidential term. The latest: Brazil's currency plunged roughly 9% against the dollar. The benchmark Brazilian stock market index, the Ibovespa, dove about 14%.Prices of 10-year local-currency Brazilian government bonds dove, pushing yields to about 15%. The other side: Da Silva defeated right-wing candidate Flávio Bolsonaro, a son of the former president Jair Bolsonaro and a senator, whose victory in the first round of the presidential contest ignited a rally in Brazilian assets earlier this month. The younger Bolsonaro's promises to clamp down on government spending had been well-received by international financial markets. Bolsonaro has so far refused to concede his defeat, taking a page out of the playbook of his father, who last year was convicted of attempting a coup to remain in power, after he was defeated by Lul…

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