Markets: dollar bonds rebound 5% and the stock market retreats after the Carnival holidays

Argentina’s stock market saw a roundup on Wednesday with a strong rebound in debt securities, reacting to February’s price crash, while equities fell on greater overall risk aversion , in a short week due to the recent carnival holidays.

In equities, investors remained cautious and took short profits on growing domestic and external doubts.

The stock index S&P Merval of the Buenos Aires Stock Exchange lost 1.7%, to 244,719 units at the close, after falling a slight 0.3% in pesos over the past week. The financial market has been rapidly adapting to trends in external markets over the past few hours.

Among ADRs and Argentine stocks traded in dollars on Wall Street, the numbers were mixed, with notable increases for Cresud (+2.8%) and Mercado Libre (+1.7%)and higher losses for Loma Negra (-3.3%) and Tenaris (-2.9%).

The US market assimilated with slight declines the publication of the minutes of the last meeting of the US central bank (Federal Reserve) which gave signals on how much interest rates should increase further to curb inflation and cool an economy that has remained stronger than expected.

“The deterioration of fundamentals local markets and a more demanding international environment for emerging markets” complicates the market, Cohen said in a report.

“In January, inflation accelerated and upward pressure from service prices is a concern. The producer price index also beat expectations and marked the biggest increase since June last year. This, coupled with strong retail sales data in January, led to heightened expectations for a Fed rate hike, which also strengthened the dollar globally,” Cohen’s report summarizes.

For its part, at the local level, high inflation, the meager reserves of the Central Bank and the high budget deficit in an election year are worrying investors.

On the other hand, the bonds Global Argentina rebounded 4.9% on average on Wall Street with the possibility of buying after the recent falls. He countries at risk of Argentina, which measures the yield differential of US Treasuries with similar emerging issues, subtracted 41 units, from the 2,137 dots Base at 6:10 p.m.

The bone dollar bonds They came to exhibit throughout the month of February fall in prices, by 16% on average for public securities restructured under Argentine and foreign law. As the negative streak of the previous days deepens, investors remain attentive to the evolution of international reserves, inflation, the budget deficit, the debt buyback and the possible Repo that the government would negotiate with the banks foreign.

“In this scenario, volatility has become present because the investing public is starting to think about the decisions the company will make. Federal Reservewhether monetary policies will be more rigid, given that an annual inflation target of 2% is sought, added to the fact that the economic data that have been published during the week – such as the retail sales and producer price index- They were better than expected,” he said. Priscilla Brunoanalyst at Rava Bursatil.

“Markets are beginning to price in more rate hikes by the Fed in 2023 as inflation fears resurface,” Portfolio Personal Inversiones said.

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