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Financial markets rallied sharply Monday following President Javier Milei's commanding performance in midterm elections, with investors interpreting the results as strong public backing for his aggressive economic overhaul.
The Merval stock index jumped more than 20 percent at the opening bell, while the peso gained 9.5 percent against the dollar in early Buenos Aires trading. Government bond yields dropped 3.83 percentage points to 14.34 percent, reflecting growing confidence in Argentine debt.
Milei's La Libertad Avanza party captured 40.7 percent of the vote in Sunday's elections to fill half the lower house and one-third of the Senate, according to the National Election Commission with 98.9 percent of polling stations counted. The Peronist opposition received 31.7 percent.
The outcome marks a significant defeat for the center-left Peronist movement, which Milei unseated in the 2023 presidential election. Milei claimed his party had more than tripled its congressional representation, though final seat allocations remained unclear Monday.
"The most reformist [Congress] in Argentina's history," Milei said of the incoming legislative body.
U.S. President Donald Trump, who has emerged as a key Milei supporter, congratulated the Argentine leader on his "landslide victory" via Truth Social while traveling in Asia. "Our confidence in him was justified by the People of Argentina," Trump wrote.
Washington recently pledged $40 billion in support to stabilize Argentina's economy — $20 billion through a currency swap line and another potential $20 billion from private banks and sovereign wealth funds. Trump had previously warned he would withhold assistance if Milei lost.
The election results brought relief to markets after weeks of currency volatility. The peso had come under severe pressure as investors worried a poor showing for Milei would derail his program of spending cuts and deregulation. The government spent over $1 billion defending the currency ahead of the vote.
Since taking office, Milei has eliminated tens of thousands of public sector positions, halted public works projects, reduced spending on healthcare, education and pensions, and pursued extensive deregulation. The measures initially deepened poverty but succeeded in cutting inflation by two-thirds and eliminating a budget deficit that had persisted for 14 years.
The elections represented the first nationwide assessment of Milei's support since his 2023 victory. His party rebounded from a setback last month when it lost Buenos Aires local elections.
Buenos Aires Governor Axel Kicillof, a leading Milei critic, noted that "six out of 10 Argentines have said that they don't agree with the model he's proposing."
The president appeared positioned to secure the one-third threshold needed to prevent lawmakers from overturning his reforms in the lower house, though Senate math may require coalition-building.
Hundreds of supporters gathered at a La Libertad Avanza celebration in Buenos Aires, where the mood was jubilant.
"I'm very happy and excited. I didn't expect such a large number," said Facundo Campos, a 38-year-old marketing consultant.
The vote came as Milei faced criticism over corruption allegations involving two members of his inner circle.
Adriana Cotoneo, a 69-year-old pensioner, explained her vote for La Libertad Avanza pragmatically: "Not because I believe it's the best option, but because I'm clear about who I want to be gone," referring to the Peronists.
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