|Day's range||30,214.44 - 31,899.64|
|52-week range||24,618.09 - 44,470.76|
A bruising week for Argentine assets following recent primary elections has awoken emerging market bond investors to a harsh reality: their preferred candidate, incumbent president Mauricio Macri, is slated ...
Argentina went to the polls on Sunday to choose the candidates in the presidential election to be held on October 27. Mr Fernandez won the primary by a large margin (47 per cent to 32 per cent), enough to secure the presidency in October (45 per cent is the threshold to avoid a run-off). Government dollar bonds lost about 25 per cent on average, with yields rising to about 35 per cent on short-term notes, while credit default swaps showed an implied default probability of 75 per cent.
Argentina’s stock market is, not for the first time, in the headlines for all the wrong reasons. Opposition candidate Alberto Fernández comprehensively beat market-friendly President Mauricio Macri in primary elections at the weekend. The result drove fears among investors that former president Cristina Fernández de Kirchner, Mr Fernández’s running mate and longstanding market bogeywoman, could return to power in October’s election.
Argentina’s president Mauricio Macri was always going to face an uphill battle to secure a second mandate. In response, an already weak currency plunged another 23 per cent to a new low of 60 per dollar while the Merval stock market dived 11 per cent. Prices for the country’s debts also collapsed, sending yields on both the 10-year euro-denominated note due 2028 and the century bond to record highs.
(Bloomberg) -- Argentina’s President Mauricio Macri unexpectedly lost a primary vote by a landslide, foreshadowing a defeat in October’s presidential election and a possible return to the policies of his predecessor, Cristina Kirchner.Argentina’s international bonds and stocks tumbled in London and New York early trading after the vote, effectively a test of national sentiment before the two-round presidential ballot. The scale of Macri’s defeat took pollsters by surprise, yet it reflects widespread public dismay at the country’s direction amid recession, austerity and inflation running at more than 50%.With some 99% of ballots counted, Alberto Fernandez, the main opposition candidate who has Kirchner as his running mate, took almost 48% of the vote to 32% for Macri. If that result were to be replicated in October, Fernandez would take the presidency without the need for a runoff.The nation’s century bond due in 2117 collapsed, sending the yield up more than two percentage points to 11.9%, the highest since the notes were sold two years ago, according to data compiled by Bloomberg. Dollar bonds due in 2028 also plunged more than 18% in New York, while American depositary receipts from Argentine companies sank in early trading.“This election is over,” said Lucas Romero, director of polling firm Synopsis. “There’s no way the government can overcome this.” Pollsters have long forecast that Macri would have trouble overcoming defeat by a margin of more than 7 percentage points.The primaries were originally intended to whittle down candidates within each party ahead of the elections proper on Oct. 27. But because the parties each fielded a single ticket, the ballot ended up working as a broad measure of voter sentiment.Macri conceded defeat on Sunday even before the release of official numbers, which were delayed by the slow counting of votes in the province of Buenos Aires. “We had a bad election,” he told a crowd of somber supporters in Argentina’s capital. “We’ll have to redouble our efforts.”In an emergency meeting of his cabinet and other close aides late on Sunday, Macri ruled out any changes to the presidential team, La Nacion newspaper reported.Investors now face the reality that voters are losing patience with the market-friendly policies adopted by Macri, and are prepared to take a gamble on a return of the type of interventionist measures that were common place under Kirchner. The former president nationalized pension funds, imposed currency controls and tampered with economic statistics during her time in office from 2007 to 2015.Macri succeeded her with pledges to boost the economy and return Argentina to the international fold, but was instead forced to seek a record $56 billion bailout from the International Monetary Fund and raise interest rates to more than 70% following a currency crisis last year. While the economy started to show signs of slowly recovering from recession earlier this year, what progress there has been failed to convince voters to back Macri on Sunday.Fernandez, 60, who has yet to lay out detailed economic policies, made a point of trying to allay investor fears in a speech after the release of official results.“We were never crazy while in power,” he told supporters in Buenos Aires. “We always fix problems left by others.”Currency WoesMonday’s sell-off was exacerbated by the last-minute wave of optimism about Macri’s prospects that caused the Merval stock index to jump 6.7% on Friday.Doubts about the future of the IMF deal under Fernandez may fuel a currency rout that is likely to put the central bank in a challenging situation. The bank has so far managed to stabilize the peso with a ultra-tight monetary policy and interventions in the peso futures market with the blessing of the IMF. The Argentine currency will start trading around 9 a.m. New York. To win outright on Oct. 27, the top candidate must receive 45% of valid votes, or 40% of them with a 10 point difference from the second-placed contender. If neither scenario happens, there’s a runoff vote on Nov. 24.Polls for weeks have shown Macri and Fernandez heading toward a runoff.“It’s one in another line of elections globally where the pollsters had absolutely no clue,” said Walter Stoeppelwerth, chief investment officer at Portfolio Personal Inversiones, a broker in Buenos Aires. “Everybody I talk to is in shock.”(Updates with market reaction from second paragraph)\--With assistance from Rodrigo Orihuela, Raymond Colitt, Hannah Benjamin, Tasos Vossos and Jonathan Gilbert.To contact the reporters on this story: Patrick Gillespie in Buenos Aires at firstname.lastname@example.org;Jorgelina do Rosario in Buenos Aires at email@example.com;Carolina Millan in Buenos Aires at firstname.lastname@example.orgTo contact the editors responsible for this story: Juan Pablo Spinetto at email@example.com, Walter Brandimarte, Alan CrawfordFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Consumer prices rose 3.4% from March and 55.8% from a year ago, according to government figures published Wednesday. Argentine bond investors welcomed the news, with dollar bonds due 2028 falling as much as 16 basis points to 11.02%, according to prices compiled by Bloomberg. Argentine central bank President Guido Sandleris said Wednesday that April inflation represented "a significant drop" from the previous month and that he expects inflation to continue to slow.
Yields as measured by the Bloomberg Barclays Global Aggregate Treasuries Index have risen from this year’s low of 1.15 percent in late March to 1.27 percent on Tuesday. In a sign of just how pessimistic the bond market is on the economic outlook, government bonds globally rallied unusually hard after a small miss in a second-tier German economic report on business sentiment, with yields on that nation’s 10-year bonds dropping back below zero. Bond yields throughout the euro zone fell as well.
Emerging-market currencies rounded off a winning month, defying the prospect of further rate hikes by the Federal Reserve, as more developing-nation central banks deployed tighter monetary policies to backstop local markets. Trade tension between China and the U.S. escalated as some $200 billion of Chinese products became subject to U.S. tariffs on Sept. 24, on top of $50 billion of existing levies.
Emerging-market stocks, currencies and bonds were unfazed by an escalation in the U.S.-China trade dispute, rising for a second week as the dollar retreated. The Chinese yuan had its first weekly gain this month as Premier Li Keqiang said the country won’t devalue its currency in order to make its exports more competitive amid trade tension with the U.S.
U.S. stocks rose to a new record on Thursday, prompting President Donald Trump to mark the occasion with a tweet that, in part, said "Congratulations USA!" That's all well and good, but what investors really care about is relative performance, as in how one asset, security or market is performing or valued relative to others. In that sense, U.S. stocks are suddenly falling short. Although the S&P 500 Index has gained about 1.50 percent since Sept. 11, the MSCI All-Country World Index of equities excluding those from the U.S. has jumped 3.71 percent.
The selloff pummeling emerging market currencies shifted to stocks as contagion concerns weighed on risk assets and President Donald Trump threatened to impose tariffs on an additional $267 billion of Chinese goods.