World markets are experiencing a day of sharp falls, given the fear caused by a new wave of coronavirus infections
The country risk index of Argentina jumped this afternoon and climbed to the 1,866 basis points, its highest value in the last 14 months.
That indicator – measured by the JP Morgan bank – totaled 44 units this Friday, a new maximum since September 2020.
The markets – both local and international – are experiencing a day of sharp falls, given the fear caused by a new wave of Covid-19 infections in several European countries.
Argentine stocks traded on Wall Street (ADRs) traded with losses of up to 9%, led by the online tourism agency To take off, after the decision of the Central Bank to put obstacles to the sale of tickets and accommodation abroad.
Argentine public debt bonds also fell: 2% on average.
On the Buenos Aires Stock Exchange, the leading stocks lost 4.41, with the S&P MerVal indicator at 81,208 points.
The most pronounced declines were observed in Cresud’s papers (3.77%); Aluar (4.61); Galicia Group (4.49%); YPF (6.29) and Loma Negra (7%), among others.
Why Argentina Raises Doubts on Wall Street
Traders believe that the weakness in assets is a reflection of the intrigues that are generated on Wall Street, given the urgency to agree with the IMF and the uncertainty caused by the loss of the majority in the Senate by the ruling party.
“The movement in emerging markets in recent days is a wake-up call to accelerate negotiations in order not to suffer greater exchange rate volatilities in the coming months. Unfortunately, the opportunity to reach a quick agreement in the midst of the 2020 pandemic has been missed. that would surely have allowed greater concessions for Argentina, and suffer less macroeconomic wear and tear on foreign exchange reserves, “said economist Joaquín Marque, director of UG Valores.
Wall Street is not trading this Thursday for the Thanksgiving holiday
“A madness that is not understood”
Jorge Fedio, an analyst at Clave Bursátil, said that “the electoral trade is over and the post-PASO decline was repeated, although greater. It could not be different, the political reaction is not consistent with what really happened. The Government in his blindness did not admit defeat and celebrated it as triumph. All a madness that is not understood, does not keep logic, the numbers played against him, they lost millions of voters and on top of that they were left without an automatic majority in the Senate. Instead, the opposition achieved what it set out to do, parliamentary balance. ”
In addition, the global context was influenced by concerns about the European outbreaks of COVID-19, a potential hike in rates from the Federal Reserve and the notorious weakness of the Turkish lira.
“Investors remain vigilant for political signals as are those that will mark the viability of reaching a consensus between the main forces from the presentation of the multi-year economic plan“, said Gustavo Ber, economist at Estudio Ber.
“Not only is this challenge complex, in view of the pulls, but also even reaching an agreement with the IMF, doubts are growing regarding the ability to meet the goals set in the coming years,” he added.
The markets distrust the possibilities of the Argentine State to face its debts
In a conference organized by the Central Bank, the Minister of Economy, Martín Guzmán, said that it is necessary to refinance the debt with the IMF because it is “the main obstacle to maintaining stability”, pending the plan that aims to establish the foundations of the agreement with the agency.
In the framework of the Monetary and Banking Conference of the BCRA, the official affirmed that it seeks to “depend less on indebtedness and monetary issuance” to finance the public deficit, in the face of inflation expected to exceed 50% for this year.
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