Here Are the Key Market Reactions to Argentina’s Election Surprise

(Bloomberg) -- Economy Minister Sergio Massa took 37% of the vote Sunday in Argentina’s presidential election, forcing a runoff against outsider libertarian Javier Milei, who had been the frontrunner. Here are the key takeaways:

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• The surprising resilience shown by the incumbent Peronist government suggests there won’t be another sharp drop in the official peso rate, which was devalued by 18% to 350 per dollar the morning after Milei won a primary vote in August. The currency strengthened 14% on the black market Monday, to 1,050 from 1,200 per US greenback.

• Bonds, both sovereign and corporate, took a heavy hit. The country’s dollar notes were the worst performers in emerging markets, with bonds due in 2030 dropping more than 3 cents — the most since July 2020. State oil driller YPF SA‘s debt also fell.

• Equities tumbled. The $53 million Global X MSCI Argentina ETF dropped as much as 2.9% in early trading Monday and YPF’s US-listed shares plunged 12%.

• Attention now turns to the Nov. 19 runoff election, with both Massa and Milei wasting no time in reaching out to voters who backed the main promarket opposition coalition. Its leader, Patricia Bullrich, came in third with 24% of the vote — largely centered in the city of Buenos Aires. Where that support goes in coming weeks will determine who takes the reins of South America’s second-largest economy.

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