Markets cheer Trump’s defeat, but what does it mean for Argentina?

Markets reacted positively to the surprise defeat of President Donald Trump in the U.S. midterm elections, with major stock indexes posting gains. The research firm Puente identified two main reasons for the rally: slower U.S. government spending growth and the expectation of a hard line from the Trump administration on trade and geopolitical issues.

Analysts in Argentina are divided over the impact of the result on the local market. While the government of Javier Milei, who aligned with Trump, saw some support, they note that Trump's policies have generated international uncertainty that has affected Argentina. The opposition's control of both chambers of Congress in Washington could lead to slower U.S. economic growth and less capital flow, which could be particularly detrimental to riskier markets like Argentina.

Argentina's economy was already growing prior to the elections, but increased oil prices and inflation pressures from the Federal Reserve's interest rate hikes created external shocks for the country. The $20 billion financial rescue package from the U.S. Treasury last year helped stabilize the peso and avoided a run on the currency.

However, uncertainty remains about whether another U.S. bailout will be available in the future. Analyst Jorge Ángel Harker believes concerns over the impact of the election result are "overblown," as the Trump administration's use of the Exchange Stabilization Fund did not require congressional approval. The Merval stock market index fell 4.2% in dollar terms, and Argentina's country risk index reached its highest point in 12 months.

The market's focus remains on economic activity, legislative decisions, and electoral risks ahead of the 2027 presidential election in Argentina.