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Sunday, April 2, 2023

Powell spoke, Wall Street trembled and dragged down Argentine assets: falls of up to 7%

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Global markets were shaken yesterday after the words of the head of the United States Federal Reserve, Jerome Powell, who anticipated that the rise in rates to combat inflation may be greater than expected. Wall Street traded lower. This dragged down Argentine assets, which reversed the increases experienced in the previous session after Sergio Massa confirmed the debt swap in pesos. ADRs fell as much as 7% and dollar bonds also fell.

Energy and financial papers lost up to 7.1% on Wall Street, led by YPF. Transportadora de Gas del Sur lost 5%; Irsa, 4.3%; and Supervielle bank, 4.1%. In the local market, the S&P Merval index fell 2.6% to 246,501.02 points, after gaining 4.2% in the two previous sessions. In the leading panel, the main falls were for YPF (6.2%), Aluar (5.6%) and Transportadora de Gas del Sur (3.9%).

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What had a negative impact on Wall Street prices was Powell’s speech, in which he warned that the Fed rate could continue raising interest rates beyond 5.1%, the ceiling expected so far. In addition, he argued that his portfolio is prepared “to increase rates of rate hikes if the totality of incoming data indicates that faster monetary tightening is warranted.” Given this, the Dow Jones industrial index fell 1.7%, the S&P 500 fell 1.5 and the Nasdaq technology lost 1.2%.

YPF’s fall, for its part, was also driven by the drop in the price of oil. The barrel of the WTI variety fell 4% to u$s77.30, while Brent fell 3.5%, to u$s83.20.

After a Monday of strong advances on horseback of the exchange announcement, the bonds fell yesterday: they lost up to 8% during the day but then cut the losses. The Bonar 2029 closed with a decrease of 2.9%); Global 2030, 2.3%; and Bonar 2035, 2.2%. In this context, the country risk rose 0.39% to 2,045 basis points.

In contrast, dollar-linked sovereign bonds rose 0.4% on average, dual bonds averaged increases of 0.2% and inflation-indexed bonds advanced 0.3% in the case of the Lecer and the Boncer remained stable.

For their part, financial dollars resumed their rises. The CCL rose 0.8% to $375.69 and the MEP rose 1.3% to $366.97. Instead, the blue fell $1 to $371, its third straight drop, taking it to its lowest level in seven weeks.

Source: Ambito

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