Mauricio Macri, Argentina's president, arrives at a news conference at the Juntos por el Cambio party headquarters during a primary election night rally in the Palermo neighborhood of Buenos Aires, Argentina, on Sunday, Aug. 11, 2019. Erica Canepa | Bloomberg | Getty Images

Argentina's peso and stock market sold off steeply Monday after the country's center-right leader, President Mauricio Macri, performed poorly in primary elections. Macri lost by a far greater margin than expected on Sunday, early official results showed, casting serious doubt over the incumbent's reelection chances in October. The main Argentine stock market plunged more than 30% on Monday, marking the second-biggest one day slump anywhere since 1950, Reuters reported. Meanwhile, the peso closed 15% weaker at 53.5 per U.S. dollar. The currency had been trading at 45.25 on Friday. The election result had earlier prompted Argentina's euro-denominated bond to fall 11 cents lower, according to data reported by Reuters.

Presidential candidate Alberto Fernandez talks to supporters at the "Frente de Todos" party headquarters during the Simultaneous and Mandatory Open Primaries (PASO) on August 12, 2019, in Buenos Aires, Argentina. Ricardo Ceppi | Getty Images News | Getty Images

The opposition ticket of center-left Alberto Fernandez, whose running mate is populist ex-leader Cristina Fernandez de Kirchner, secured 47.7% of the vote, with roughly 99% of the ballots counted. Meanwhile, Macri and his running mate, Miguel Angel Pichetto, received 32.1% of the vote. At a news conference Monday, Macri said his coalition would "reverse bad primary election result of yesterday" and that the Peronist opposition should look at its own policies after Monday's market slide, according to Reuters. The result of the primaries, seen by many as a key gauge for the first round of Argentina's presidential elections on Oct. 27, is thought to be a clear signal that the South American country is ready to reject the ruling government's austere economic policies. It has prompted analysts to warn of widespread panic in financial markets, with Argentine stocks, bonds and the country's super-sensitive peso thought to be headed for a day of turmoil.

Speaking from Buenos Aires on Monday morning, Jimena Blanco, head of Americas research at risk consultancy Verisk Maplecroft, told CNBC that nobody — not even the most optimistic Fernandez supporters — expected to wake up to this result. "There is total shock on both sides," Blanco said, emphasizing that almost all polls had predicted a much closer race between the two leading candidates. "The No. 1 thing to learn is that Argentines do not want austerity."

'A very volatile day'

The presidential primaries were viewed by many as a referendum on Macri's painful economic reforms. The business-friendly president had promised to continue with the same austerity-driven approach if reelected later this year. He had hoped recent glimmers of an economic revival would be enough for voters in South America's second-largest country to stick with his free markets reform agenda despite a recession and 55% inflation. However, analysts told CNBC that his reelection chances were now looking "increasingly bleak." Speaking to supporters shortly after the result, Macri recognized that his team had suffered a "bad election."

I don't think there's a way to sugar-coat this. We're likely to see panicked market reaction. Abhijit Surya country analyst at the Economist Intelligence Unit

In contrast, Fernandez — who was expected to come out on top in the symbolic primaries but by a much smaller margin — said the country could look forward to creating a "new history." Verisk Maplecroft's Blanco anticipated a "very volatile day" for financial markets Monday. That's because the scale of Fernandez's win had put the center-left candidate on track to secure a congressional majority in presidential elections later this year. In such a scenario, Fernandez would be able to undo economic reforms put into place by Macri's administration — including measures related to the International Monetary Fund's bailout package. "That is what will worry markets most."

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