Hear
When the financial markets closed, the tension in Congress was in crescendo. The Government had to overcome a long debate on the Base Law and the tax reform; the vote at the time seemed tied, while clashes between protesters and the police multiplied. All this news was taken with caution by investors, in a day that was called a “Super Wednesday”, both due to local and international events.
These days, in the market, politics weighs more than the economy. The approval or rejection of the initiative will mark the pulse of the dollar, country risk and Argentine actions in the coming weeks, since it will end up defining whether Javier Milei’s administration has the political support to carry out the proposed macroeconomic reforms. . In parallel, the tax reform will allow it to have tools to continue sustaining the fiscal surplus that was obtained in the first months of the year.
In this scenario, free exchange rates operated with some falls, waiting to know how the vote could end. On the other hand, with a tailwind coming from the United States due to the positive inflation data in May, Argentine shares listed on Wall Street rose up to 5% and the country risk pierced the barrier of 1,500 basis points.
“It is good that the Government manages to unblock the mess it got into, partly due to its own issues, but The most important thing is that you get instruments to start building your way out of the stocks during the second semester. I think the market is going to look at the quorum in the Senate, the vote in general and also the vote in particular on the fiscal package and the RIGI [Régimen de Incentivo para Grandes Inversiones], For example. But this doesn’t end here. If approved, it will return to Deputies. And the changes that have already been introduced to the Base Law, and those that seem to continue to be introduced, are quite significant.“said Gabriel Caamaño, director of the consulting firm Ledesma.
This Wednesday, the blue dollar sold for $1285 in the caves that operate in the downtown area of Buenos Aires. They were $10 less than yesterday (-0.8%), which allowed it to move away from $1,295, the highest nominal price on record. However, in the first days of June it accumulated an increase of $60 (+4.9%).
Financial exchange rates went through a day of volatility, with marked rises and falls. At the end of the day, the MEP dollar ended with an advance of $5 and was trading at $1,278.94 (+0.4%). Meanwhile, the cash with settlement (CCL) appeared on screens at $1,301.89, a daily drop of $3.89 (-0.3%).
Furthermore, although the analysts had their attention focused on the Senate floor, It was also a “Super Wednesday” internationally. This morning it was learned that in May inflation in the United States was 3.3% year-on-year, a figure that was below analysts’ estimates. “Today the international markets were very positive because of this,” added Caamaño.
It was also good information for the meeting of the United States Federal Reserve (FED). Although the authorities decided to maintain the interest rate in the 5.25%-5.5% range, in line with market expectations, they stated that there was “modest progress” to reach the inflation goal of 2% annually. and they announced that there will be a rate cut towards the end of the year.
In response, the main US indices traded higher and affected the Buenos Aires stock market, which rose 1.5%. In the main panel, the actions of the Supervielle Bank (+4.5%), the Galicia Financial Group (+3.9%), Silver Commercial Society (+3.1%) Macro Bank (+2.9%).
The green numbers were also observed among the Argentine stocks listed on the New York Stock Exchange (ADR), waiting for more information to be known about how the senators will vote and what changes the official projects undergo. The papers of Supervielle Bank led the wheel, with 5.9%, followed by Galicia Financial Group (+5.5%), the Macro Bank (+4.5%), and Globant (+3.9%).
“A priori, if the Bases Law is approved, it would be a positive milestone in weeks where political setbacks and the decrease in reserve growth caused a drop in Argentine assets. If approved, we believe it will provide support and even allow assets to recover. However, there are still several factors to be resolved, mainly the sustainability of the fiscal accounts and the exit from the exchange rate,” said Alain Fainsod, commercial director of the Cocos Capital trading desk.
In the midst of that wait, the bonuses debt sovereigns bounced abroad. The Bonares, which are governed by local law, rose 1.16% (AL35D). The Global, which are characterized by having foreign legislation, advanced 2.06% (GD35D). The country risk ended the day at 1496 basis points, 29 units less than yesterday (-1.9%).
“The result of the Bases Law will undoubtedly impact the assets. A positive result for the ruling party, in addition to representing a triumph in the legislative sphere (where the Government has a clear minority), It would symbolize a vote of confidence that would provide governability to the mandate of La Libertad Avanza. Likewise, the approval of the fiscal package assures the Government of being able to achieve collection channels that allow it to continue consolidating the fiscal balance,” said Ignacio Morales, analyst at Wise Capital.
