Argentina’s country risk hits one-year high at 831 basis points

Argentina’s country risk index climbed to 831 basis points on Tuesday, Nov. 3, reaching its highest level in a year amid international market volatility. The indicator, compiled by JP Morgan, rose 3.2% from the previous close, reflecting ongoing difficulties for the country in regaining international credit access.

The sovereign debt gauge started the rueda at 805 points before pushing higher. The indicator doubled from lows near 400 points seen in early July, pushing the year-to-date increase to 45.5%. Meanwhile, the sovereign debt of Argentina barely fell by an average of 0.1%, following a 1.4% collapse in October, with the country risk indicator standing at 808 basis points at 1430 GMT after jumping nearly 30% the previous month.

Midterm Elections in the United States and Market Caution

International markets traded with mixed signals on Tuesday as voters went to the polls for United States midterm elections. The elections will determine control of the 435 seats in the House of Representatives, 35 Senate seats, and governorships across 36 states, per Max Capital’s briefing.

IOL invertilonline pointed to investor caution driven by these political shifts, noting that President Donald Trump faces mounting pressures tied to the elections.

In Wall Street trading, US stock futures showed varying movement. IOL reported that the Dow Jones fell 0.70%, the S&P 500 dropped 0.12%, and the Nasdaq-100 gained 0.28%. Portfolio Personal Inversiones (PPI) highlighted that a Democratic victory in both chambers could restrict the ability of Donald Trump to advance with new legislative initiatives, pointing to a looming federal funding deadline on December 11.

Crude Oil Advances Following Middle East Strikes

International oil prices climbed on Tuesday. Brent crude traded at $104.30 per barrel for January delivery, while West Texas Intermediate for December rose 0.1% to $96.58. Higher crude prices present a dual effect for Argentina, boosting export revenues for domestic energy firms while stoking global inflationary pressures and elevated interest rates. North Sea Brent crude futures for January delivery fell 0.5% to $104.30 a barrel, whereas US West Texas Intermediate crude for December climbed 0.1% to $96.58.

Buenos Aires Stocks Rise as Trading Hours Expand

On the domestic front, the MSCI Merval index on the Buenos Aires Stock Exchange reversed early losses to finish up 1.6% in pesos at 90,447 points, representing a 0.4% rise in dollar terms to 54 units. Global bonds dropped by up to 0.3% at the opening in New York, while Argentine stocks traded in Wall Street displayed mostly negative figures. The Argentine stock market added one extra hour of trading starting this week, extending until 18:00 local time (2100 GMT) to coincide with New York winter time.

In the foreign exchange market, the dollar rose $5.50 to close at $1,570 at Banco Nación, marking a new nominal high. Francisco Díaz Mayer, head of operations at ABC Mercado de Cambios, noted that the currency accumulated a 1.11% gain across the first two sessions of November, specifying that the dollar registered an increase of $5.50 (+0.36%) compared to the previous day and gathered an advance of $17 (+1.11%) during the first two sessions of November. In Brazil, the dollar climbed 1.2% to 5.50 reals per unit. Vista Energy advanced 1.5% and Mercado Libre lost 1%.

To counteract financial pressures and reserve outflows, the Argentine government through the Financial Information Unit (UIF) relaxed controls to incorporate undeclared money into the banking system. This resolution raises questions regarding the international standards of the Financial Action Task Force (FATF), of which Argentina has been a member since 2000. Central Bank reserves decreased by USD 148 million to settle at USD 50,293 million after the monetary authority abstained from purchasing foreign currency during a high-pressure session. Analysts from that firm indicated, This behavior does not surprise on a day of strong pressure on the exchange rate and in a context where the Treasury needs to acquire dollars to face its upcoming commitments. Financial exchange rates advanced by up to half a point.