The escalation of the war between Iran and Israel generated a rise in the price of oil and an impact on equities and emerging markets. How does this affect the local market?
The market measures the impact it will have on Argentine assets and anticipates what is coming
Iran launched an attack with 181 missiles against Israel this week what generated a global alert which had its strong correlation in the world markets. Thus, the impact first reached the commoditieswith oil reversing a downward trend and accelerating a strong rise, the rise in the price of gold due to the search for refuge and an aversion to risky assets that is inherent of the tensions it generates an armed conflict.
In this line, the ETF that follows emerging markets and excludes China (EMXC) fell 0.7% on Tuesday. For its part, Wall Street frame its biggest drop in a monthalthough at the closing it cut the heavy losses. In fact, the actions that rose the most were those that have to do with defense. Thus, the papers advanced as Lockheed Martin Corporation (+3.4%) Northrop Grumman Corporation (+3.3%) and L3Harris Technologies Inc. (+3%).
“The main commodity where this impacts is the oil because this war escalation in Middle East affects producing countries. The barrel in the last month and a half fell from US$85 and hit a floor at US$65 because there was oversupply. Now, Saudi Arabia said it was going to cut self-imposed restrictions on oil supply and that made the price bounce a little“he told Scope, Rafael Di Giornodirector of Profession
How this tension in the markets affects Argentine assets
In turn, Andrés Reschini of F2 Financial Solutionssaid: “For now an increase in commodity prices brings some oxygen to Argentina, but if a scenario of greater escalation occurs that implies that the markets become more cautious due to worsening economic prospects and that causes flows to leave emerging markets I don’t think it will be favorable in the medium term.“.
On Tuesday, the S&P Merval ended with a slight rise but everything would indicate that, on this day I would not repeat the performance. The “drivers” that mattered had more to do with the local context: the inflation estimates and the announcement that Import tariffs will be reduced by approximately 30 final goods and also important inputs and capital goods.
In terms of fixed income, the dollar bonds Argentines It seems that they were left out of the global impact. “Given the escalation of the conflict in the Middle East, world markets turned towards conservative assets, but our Globals were able to surf the bad waves“, analyzed the stock broker PPI on the performance of local fixed income, a situation that is repeated this Wednesday, when sovereign debt in foreign currency rises again.
What’s coming in the next few days
Looking forward, for the economist Gustavo Ber“the investors They are attentive to political context -with multiple events on the table leading up to next year’s legislative elections- and the progress in the ordering of the macrowith short-term epicenter in the continuity of the fiscal surplus and the disinflation processwhich, as anticipated, during September, could reach a level below 4% and, thus, contribute to continuing the reduction of the nominal value of the economy.”
Source: Ambito
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