Argentina Debt Risk Falls, Shares Slip 1% | Argentina Market Report, Nov 12
Argentina's shares slipped about 1% on Thursday while its dollar bonds rebounded and the peso held near 1,545 per US dollar. The post Argentina Debt Risk Falls, Shares Slip 1% | Argentina Market Report, Nov 12 appeared first on The Rio Times .
On November 12, Argentina's main stock index, the Merval, saw a slight decline of around 1% to approximately 82,500 points. In contrast, the country's dollar bonds experienced a rebound. The local currency, the peso, remained relatively stable, trading at about 1,545 per US dollar. The day was characterized by contrasting market moods.
The shares followed the downward trend observed on Wall Street, while bond investors who had been selling Argentine debt earlier in the week decided to repurchase, thereby increasing the yield they demanded to about 830 points. Two factors contributed to these market movements. The US 10-year Treasury yield rose to 5.10%, while Argentina's October inflation rate came in at 2.2%, exceeding the 1.9% expectation by economists.
It is important to note that Argentine banks hold a significant portion of the government's debt, making their New York-listed shares a useful indicator of investors' sentiments regarding the bond market. Wall Street's volatility was reflected in the Merval index, which dropped about 1% to roughly 82,500 points. The S&P 500, representing 500 large US companies, declined by 0.35%, while the VIX, Wall Street's fear gauge, increased by 6.92% to 18.70.
The decline in US stocks was triggered by the departure of Nvidia's CEO, Jensen Huang, who resigned amid controversy. Argentine shares trading in New York mirrored the broader tech sector decline. The peso's story was more subdued, with the dollar closing at approximately 1,545 pesos, indicating minimal change from the previous day.
The data suggests that external pressures led to a drop in shares, while renewed interest in bonds provided a sense of relief. Higher US yields and a stronger dollar adversely affected emerging-market shares, but Argentina's dollar bonds managed to recoup some of their losses, averaging around 1.3% in recovery. The primary driver behind the bond rebound is the anticipation of a further increase in US 10-year yields, which could potentially transform the day's modest decline into a more sustained trend.
Two distinct market narratives emerged in Argentina on this day. While shares experienced a decline, the currency remained steady, and bonds rebounded, indicating that investors were more focused on reassessing companies rather than abandoning the country altogether. The peso's weakness, driven by the weakening US dollar, was evident, with the dollar trading 2.12% higher over the past 20 trading sessions.
The peso's gradual decline, rather than a sudden drop, suggests a steady erosion in value. The recent trend in the Merval index shows a year-to-date loss of 10.97%, highlighting the cautious sentiment prevailing in the Argentine market. The sector heatmap revealed that utilities led the market's movements with a gain of 0.77%, while consumer disc. stocks lagged behind with a loss of 4.02%.
Banco Macro, BBVA Argentina, and Grupo Galicia, all banks listed in New York, suffered losses ranging from 2.8% to 3.5%, while energy companies such as YPF and Central Puerto benefitted from the rise in oil prices. Overall, investors approached the Argentine market with caution on this day, as external factors and domestic concerns combined to create a mixed market environment.
Written by urgent.news from The Rio Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
