The global financial context presents a bleak outlook for investors and equities are the ones that suffer the most. Argentine assets continue to fall this Monday.
The Argentine stocks on Wall Street collapse with force this Monday, August 5, in the middle of the global panic. Just like bonds, which have fallen by up to 4%, equities are reflecting the fear of investors fleeing risky assets.
Thus, Argentine stocks listed in New York fell by up to 7%, led by Transportadora Gas del Sur, followed by Edenor (-5.9%), Pampa Energía (-5.8%) and Grupo Financiero Galicia (-5.4%).
In the local market, the S&P Merval fell 6.4% to 1,341,935.22 points and the Merval in dollars fell 7.5% to 1,003.48 points. The largest declines were recorded by BYMA (-6.1%), Central Puerto (-5.5%), Banco Macro (-5.4%) and Superville (-5.3%). Only Loma Negra advanced 0.3%.
Why there is panic in the markets
The US unemployment data triggered a Disarming of Yen carry positionsamplifying the moves. Many investors had leveraged JPY to buy US stocks, taking advantage of low rates in Japan and a JPY that continued to depreciate. However, on Friday it was learned that unemployment rose to 4.3% in July in the United States, from 4.1% in June.
The data led the Sahm Rule, a historical indicator used by the Fed to predict recessions, to predict that the US economy is entering a recession.ecession or will do so at some point in the next 6 months. This combined with recent BOJ rate hikes, driving up funding costs for these investors while US equity valuations fell, prompting an accelerated unwinding of these leveraged positions.
“The impact on Argentina will depend on what the Fed does, due to its effect on emerging spreads. In the early hours of the morning, futures markets had discounted a high probability that the Fed would cut rates at an emergency meeting. If the Fed reacts in time to cushion the impact, The impact on emerging spreads could be contained”explained a report this morning from Facimex.
Source: Ambito
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