Voting on Sunday for mayoralties and governorships saw opposition candidates beat those backed by Petro, whose administration ends in 2026.
Petro, Colombia's first leftist president, has seen a sharp deterioration in approval ratings, according to opinion polls.
He has been beset by challenges, including the breakdown of the government's coalition in Congress and the loss of several close allies over investigations into alleged influence peddling and abuses of power, while his eldest son will face trial for alleged crimes of illicit enrichment and money laundering.
The Colombian currency appreciated 1.19% to 4,060 pesos to the dollar, its highest level in five weeks while the MSCI Colcap index on Colombia's stock exchange rose 0.50% to 1,099.33 points.
TES domestic public debt bonds maturing in February 2033 were valued at a yield of 11.859%, versus 11.93% on Friday's close.
Petro is pushing a raft of reforms through Congress, concerning pensions, health, and labor, which have caused uncertainty among business owners and investors.
The proposed pension reform has caused uncertainty among the finance sector because if approved, it would see the migration of billions of dollars of savings from privately run funds to state-owned Colpensiones, which would affect capital markets.
Sergio Olarte, Scotiabank's chief economist in Colombia, said Sunday's result will force Petro to further negotiate the reforms.
"The possibility of passing overtly structural reforms is very difficult because it's not going to be a fight between right and left," he said. "The majority of regional leaders are not extreme and that takes away the power of Petro's extremist speech."
(Reporting by Nelson Bocanegra; Writing by Oliver Griffin; Editing by Jonathan Oatis)
By Nelson Bocanegra