Away from the Carnival festivities, Argentine assets came under fire this Tuesday in international markets. Without operations in the local market due to XXL Holiday, lDollar-denominated bonds have suffered significant declines, which have come to exceed 8% and country risk has risen to 2,123 units. Equities were also hurt by the weather, with ADRs down more than 7% in New York.
After a “double” holiday for Argentine stocks and bonds, since they too failed to trade on Monday due to the US President’s Day holiday, business started the week on the wrong foot.
The perfect storm is unfolding against a backdrop of global jitters, with investors looking for signs of the United States Federal Reserve that he could tighten his policy again, as inflation in that country once again proved “resilient”.
Wall Street thus experienced its worst fall since the beginning of the year and dragged down all risky assets, including Argentines.
In a sell-off that spilled over to all major groups, the S&P 500 – an index that tracks the value of the market’s 500 largest companies – erased its monthly advance and had its worst slump since mid-December, falling 2.00%, while technology companies underperformed and the Nasdaq 100 fell 2.41%.
The punishment was sharp in Argentine stocks which extended the declines accumulated over the last month. According to the Telam news agency, they closed with declines of 3.92% in the case of the GD30, 3.65% in the AL30 and 3.63% in the GD35, three of the debt securities with the largest volume of operation.
For the analyst Gustavo Neffa, of Research for Traders, the collapse of the Argentine debt in recent weeks responds to an adverse international context and to a local government that continues to give the signs of stability that the market is looking for.
“There had been a violent uptick and now a violent purification. The upside was prompted by signs that had been coming in since October that the world was more risk-taking. But this year, foreign markets are stinging in February. But more than anything else the market didn’t like the negative reserve data, the political noise and the new decline in reserves,” he said.
For his part, economist Christian Buteler said: “There is a local component that aggravates falls. Argentine assets show significant weakness which, while there are sometimes signs of price recovery, has failed to dissipate. Then, as the market resumes its bearish path, these weaknesses become more pronounced.”
In this context, the country risk, which was around 1,800 points when Sergio Massa announced the debt buyback on January 18, accumulates a 20% increase so far this month and returned this Tuesday to 2,183 points.
A tense week is therefore expected on the financial front. This Wednesday, the Merval index will be back on track in a short week after closing low on Friday, and stocks will take note of this Tuesday’s prices on Wall Street. Nearly all listed companies in that market ended lower, led by Edesur, which fell more than 7%.
Source: Clarin
