On October 5, the day after the first round of Brazil’s general elections, the country’s financial markets were euphoric. Brazil is struggling with high debt and low growth, and investors are eager for leaders to reduce budget deficits, deregulate, cut taxes, and perhaps even privatize state assets. After nearly four years under the left-wing President Luiz Inácio Lula da Silva, known as Lula, who has been slow to implement such measures, investors hope a right-wing government will create opportunities for bold reform.

Rule by the right might be exactly what Brazil gets. The far-right Liberal Party made substantial gains in the legislature, becoming the single largest party in both the Senate and the Chamber of Deputies. Its presidential candidate, Flávio Bolsonaro, the son of the notorious former President Jair Bolsonaro, led the aging incumbent, Lula, by nearly two percentage points in the first round of voting.…