The Merval stops its fall and stocks and bonds begin to rebound after three negative days

After several days in the red, the Argentine financial market is showing signs of recovery. The S&P Merval is up 1% and dollar bonds are offering investors a respite, although the country risk remains above 700 basis points .

Stocks on the local market are trading higher after the sharp drop of the last few days. After a record 2024, the market is going through a period of adjustment in the value of assets, with the Buenos Aires stock exchange registering an increase of 1.2% this Wednesday.

Meanwhile, Argentine stocks on Wall Street (ADRs) reflect a positive trend. Among the main risers are Telecom (+2.6%), Grupo Supervielle (+2.3%) and YPF (+2.2%).

Sovereign bonds in dollars are also showing an upward trend, with a slight advance of 0.1%. In this context, the country risk falls by 1.9% (14 units) and is located at 734 basis points.

The indicator prepared by JP Morgan had been falling for eight consecutive days and, on two occasions, remained unchanged. In the City of Buenos Aires, analysts are waiting for a catalyst that will mark a defined trend in the short term, while they trust that negotiations with the International Monetary Fund (IMF) can generate positive signals for the market.

In this context, attention is also focused on the last debt auction of February, which will take place this Wednesday. The Ministry of Finance will offer short-term instruments with the aim of improving the maturity profile of the first half of the year.

The market rebound occurs in a scenario of greater optimism after INDEC reported that economic activity in December registered a year-on-year growth of 5.5%, a figure higher than analysts' projections. This result reinforces expectations that the country may follow an upward path in 2025, after a smaller-than-expected contraction in 2024.

"The good dynamism of the level of activity and the Central Bank 's foreign currency buying streak, driven by the greater liquidation of agricultural products and the inflow of financial loans, are key factors to understand this behavior," said a report by Cohen.

At 12 noon, the S&P Merval index of the Buenos Aires Stock Exchange was up 1.4%, reaching 231,000 points, after losing 5.3% in the three previous sessions. Meanwhile, bonds on the Electronic Open Market (MAE) showed an average rise of 0.2% in pesos.

“The downward trend of the Merval in dollars continues, with a correction of 22% since its maximum in January. There is a possibility that the index will continue to fall to levels of 1,800 points if confirmation of an agreement with the IMF is delayed,” warned a report from Rava Bursátil.

Balanz Capital pointed out that Argentina's country risk level has worsened compared to the rest of Latin America. However, they estimate that the completion of a new agreement with the IMF could help reduce this indicator. "The Minister of Economy, Luis Caputo, has indicated that the agreement will be reached in the first four months of the year, which could contribute to the reduction of country risk," the consultancy firm explained.

Puente analysts stressed that the market remains attentive to the second tender of the month and to the evolution of economic activity. “The tender of the Ministry of Economy is characterized by the short duration of the instruments offered, with maturities that do not exceed four months. On the other hand, the monthly estimator of economic activity registered an increase of 0.5% in December 2024 in the seasonally adjusted measurement,” they indicated.

For its part, Max Capital explained that the economy would have closed 2024 with a contraction of 1.8%, less than expected. Among the most affected sectors are construction (-18%), manufacturing (-9%) and trade (-7.5%). However, these falls were partially offset by growth in mining, oil and gas (+7.3%), as well as by the recovery of the agricultural sector (+31%), after the drought that affected production in 2023.

“The statistical carryover for 2025 was 3.2%, which leads us to adjust our annual growth projection to 5.2%,” said Max Capital.