Financial day: Argentinian stocks on Wall Street shed up to 11% as global concern grows

Most stocks traded at heavy losses on Wednesday amid lingering worries about the global banking sector following the collapse of the Bank of Silicon Valley (SVB) and the Credit Suisse shares fallamid a surge in the dollar in global markets.

The US currency rose just over 1% against a basket of six major currencies that make up the dollar index, while international crude oil prices fell 4% to their lowest level in a year.

In Argentina, the stock market dollar once again approached 400 dollars, while the index S&P Merval fell by more than 4% and lost almost everything he had won since the start of 2023given the growing fears about the situation of the banks and the day after the announcement by the INDEC of high inflation of 6.6% in February.

The leading repository S&P Merval Porteño fell 4.8%, at 209,824 units. The panel of flagship shares thus recorded a loss of 16.4% in pesos – and 20% in dollars “cash with liquid” – in five consecutive bearish rounds. The Merval maintains a gain of 3.8% in pesos in 2023, below inflation, and in dollars suffered a loss of 9.8%.

“The markets are crazy. We have gone from the problems of American banks to those of European banks, first of all Credit Suisse,” he said. Reuters Carlo FranchiniHead of Institutional Clients at Banca Ifigest in Milan.

Wall Street indicators rallied after deep U-turn and index lows Dow Jones closed with a loss of 0.9%while the tech-heavy Nasdaq rose a marginal 0.1%.

Among ADRs and shares of Argentine companies traded in dollars in New York, recent declines have continued, led by Banco Supervielle (-10.6%) and Corporación América (-9.3%).

The gestures of Credit Suisse cayeron a 25% to a new record low after statements by its largest shareholder that it would not provide more capital. With the Swiss company at the helm, European bank papers simultaneously posted broad-based declines as investor fears resurfaced over the health of the sector’s bond portfolios following the bankruptcy of Bank of Silicon Valley.

In Europe, the DAX index of the Frankfurt Stock Exchange lost 3.7%, the FTSE in London lost 3.8% and the CAC 40 in Paris recalled 3.6%.

Javier Timerman, partner of Adcap Grupo Financiero, pointed out that “Silicon Valley Bank has always had a tradition of working with technology companies. After the growth of these, this bank had so much money that it decided to invest it in US Treasury bonds, which over time devalued. With early indications that the bank could not meet these withdrawals, in a single day they withdrew $40 billion from the bank. Thanks to technology, moving money from one place to another is just a matter of minutes. The lesson here is that banks should have a more conservative profile; and besides, people will always go to the strongest banks because they know the government won’t let them fail”.

“The banking crisis that began with the collapse of Silicon Valley Bank (SVB) reminds us, to our great regret, that stable growth coexists with latent instability if the scenario of economic interrelations is characterized by weak institutional arrangements. clear”, underlined Martin Calveiraresearch economist at the IAE Business School, Universidad Austral.

“In our country, history is repeating itself. In almost all cases of financial turmoil, the economy exhibits imbalances and limited resources to handle a reversal of financial flows. This is decisive for the level of impact of the crisis. Certainly, in a context of exchange rate differential, inflation, volatility and lack of coordination in economic management, they constitute management constraints,” said Calveira.

Argentine dollar bonds also suffered market punishment. Global foreign exchange securities – in foreign law dollars – fell by 2.4% on average, while countries at risk of JP Morgan goes up in Argentina 74 units, the 2,397 dots basics, the highest level since the end of last November, after marking an intraday high of 2,413 integers.

“The international scenario for Argentina looks complicated. The US 2-year rate stands at 4.1% as the Fed threatens to be tougher on inflation, despite the fact that there are a global banking panic due to the failure of Silicon Valley Bank We already see oil falling 2.8% and gold rising 2.4% On the local side, country risk has peaked for several months and nothing indicates that this route will change shortly and reach early October parities,” he explained. Walter MorauxPresident of Wise Capital.

“For equities, the scenario is not the best, as the banking crisis could reinforce the recessionary global scenario that the market envisages for the second half. It is difficult for the Merval to break free from a bearish movement. In the case of Cedear, to take advantage of this, the dollar would have to rise with the sell-off, but not badly because the underlying asset is going to be in decline,” Morales added.

“Consistent with the above, the Fed may take a less aggressive stance given the strains in the financial sector and the gradual decline in inflation. Market estimates price the possibility of no upside interest rates this month, while others estimate 0.25%,” he said. Leonel Buccoloaccount manager at Rava Bursátil.

Maximilien Donzellihead of research at IOL (InvertirOnline), pointed out that “INDEC has published inflation data for the month of February, with a monthly variation of 6.6% and an interannual variation of 102.5%. As well as remaining at elevated levels, the latest data reflects an acceleration from the figure reported the previous month, which was around 6%. volatile in the economy – also recorded a considerable acceleration from January and settled at 7.7%”.

The Central Bank closed the wholesale conference on Wednesday with sales for $87 million to meet market needs, in session with companies for USD 328 million in the cash segment (place), which implies that the monetary entity contributed 26% of the traded volume.

The BCRA chained eight consecutive days with a negative balance due to its participation in the stock market and recorded in Net sales of $643 million in March in the MULC and during 2023 the negative balance in the MULC reaches 1,625 million dollars.

He free dollar closed agreed with a profit of two pesos in the small parallel market, $379 for sale. The “blue” currency reversed the initial drop of two pesos, when it traded at 375 pesos. In March, it rises four pesos. With the wholesale dollar gaining 49 cents to $202.56, the exchange rate differential reached 87.1%.

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