Argentina: Bonds and stocks halt bullish rally due to profit-taking.

The Argentina stock market dampens investors’ euphoria orchestrated by various factors, including twin surpluses and the rate cut.

The Buenos Aires stock market moderates its advance this Friday, March 22nd, but bonds do not stop their bullish rally and climb up to 4%, causing the country risk to decrease and fall below 1,450 basis points, reaching a three-year low.

The stock market euphoria is orchestrated by various factors, including twin surpluses (trade and financial) for the second consecutive month in February. That is, the national public sector recorded primary and financial fiscal surpluses, while the trade balance also showed a positive outcome.

On the other hand, the decision of the Central Bank (BCRA) to lower the reference interest rate of the economy and the passive repo rate from 100% annually to 80% annually. Simultaneously, the elimination of the minimum rate for term deposits, so that each bank can choose at what level it remunerates fixed-term deposits. Motivated by these changes, many fixed-rate investments ceased to be attractive, which boosted risk appetite.

Internationally, the recent decision by the US Federal Reserve to keep interest rates stable was welcomed by global markets. The Fed still expects to implement three rate cuts, which would have a positive impact on equity assets and therefore also on emerging markets

The leading index S&P Merval of the Buenos Aires stock exchange slows down its rally and remains with a meager increase of 0.2%, heading towards a weekly gain of almost 15% and thus approaching the record of 1,334,440.11 points set at the beginning of February.

In the leading panel, stocks are trading mixed, with the banking sector showing the most significant increases: Grupo Supervielle (+3.9%), Banco Macro (+2.9%), and BBVA (+2.6%). On the other hand, the biggest declines are seen in Mirgor (-2.3%), BYMA (-1.9%), and IRSA (-1.6%).

Regarding Argentine stocks on Wall Street, they maintain a similar trend to those on the Buenos Aires stock exchange, with the banking sector leading the gains and IRSA (-2%), Loma Negra (-1.4%), and Bioceres (-1.1%) experiencing the most significant declines.