Ignacio Teson•Friday, February 7, 2025•2 min read Add an article to your Reading ListRegister now to be able to add articles to your reading list."
Ignacio Teson•Friday, February 7, 2025•2 min read
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Markets reversed course on Friday, February 7, with both equities and fixed income experiencing broad declines. The volatility was driven by renewed concerns over tariffs proposed by Donald Trump, which rattled global markets. Despite this, some local news was well received by investors.
The S&P Merval started the session up 1.2% but later fell 2.3% to 2,445,020.26 points, while its dollar-denominated value dropped to 2,019.33 points, the lowest level since December 4 (2,009.70). On a weekly basis, the index is heading for its second-largest decline of the year.
Large cap stocks on the Argentine market saw losses of up to 4.4%, with Banco Macro leading the declines, followed by Banco BBVA (-4.2%), Transportadora de Gas del Sur (-4%), Telecom (-3.8%), and Banco Supervielle (-3.6%).
Inflation Expectations and IMF Negotiations
On Thursday, analysts participating in the Market Expectations Survey (REM) revised their forecasts downward, now projecting 23.2% inflation for 2025. For January’s CPI, set to be released next week, they estimate an increase of 2.3%.
Investors remain focused on negotiations between the Argentine government and the International Monetary Fund (IMF), with hopes of securing fresh dollar inflows to strengthen Central Bank (BCRA) reserves and facilitate foreign exchange market liberalization.
Fixed Income and Country Risk
Fixed-income assets also showed widespread declines, led by Global 2046 (-0.7%), Bonar 2038 (-0.7%), and Global 2038 (-0.4%).
Gains were modest, with Global 2029 (+0.3%) posting the strongest increase. Meanwhile, country risk dropped 1.4% (9 basis points) to 650, according to J.P. Morgan.
U.S. Job Market and Fed Policy Outlook
In the U.S., job growth slowed more than expected in January, following strong gains in the previous two months. However, the 4% unemployment rate suggests that the Federal Reserve may delay any interest rate cuts until at least June.
The Labor Department report, released Friday, also showed strong wage growth, with a notable increase in average hourly earnings. This resilience in the labor market continues to support economic expansion and consumer spending.
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
www.fxleaders.com