Argentina’s MERVAL Leads Emerging Markets Surge on Global Trade Thaw

Argentina’s S&P MERVAL index jumped 5.49% to 2,230,394.80 on May 12, outpacing global peers as U.S.-China tariff reductions ignited risk appetite.

The rally added 116,009.25 points, trimming its year-to-date loss to 11.97% but leaving it 22% below January’s peak. Industrial stocks led gains (+12.71%), while healthcare (-2.18%) and materials (-1.80%) lagged, reflecting shifting sector bets.

Global markets roared higher after Washington and Beijing agreed to slash reciprocal tariffs from 125% to 10%, sparking the Dow’s 1,161-point surge and Brazil’s Bovespa climb to record highs.

Argentina’s export-heavy equities capitalized on the trade détente, with energy giant YPF soaring 10.1% as oil prices stabilized. Central Puerto (+9.6%) and Telecom Argentina (+6.4%) followed, buoyed by infrastructure spending hopes.

Argentina’s MERVAL Breaks Out Amid Bullish Shift

Technical indicators flipped bullish as the MERVAL breached its 50-day moving average at 2,114,385.50. The RSI climbed to 53 from oversold territory, while Bollinger Bands signaled expanding volatility.

“This breakout could attract momentum traders,” said a Buenos Aires-based strategist, noting resistance at 2,300,000. Volume hit AR$84.1 trillion, exceeding the 30-day average by 18%.

Valuations remain depressed at 13.1x earnings, half February’s multiple, despite AR$8.1 trillion in corporate profits. The index now trades at 1.2x sales, down from 2.1x in January, as foreign investors cautiously re-enter a market still grappling with 55.9% inflation.

ETF inflows ticked up, with the Global X MSCI Argentina ETF (ARGT) rising 2.45% to $91.50 NAV. Brazil’s Bovespa edged 0.04% higher to 136,563, fueled by Petrobras (+2.71%) and Vale (+2.51%), while Argentina’s rally highlighted its sensitivity to global trade flows.

The peso held steady at 920 per dollar, supported by the Central Bank’s 29% policy rate. Market makers cited Milei’s deregulation push and Trump’s trade pivot as tailwinds, though political risks linger.

Six stocks accounted for 48% of today’s gains, exposing concentration risks. As night trading opened, futures suggested a 0.8% pullback, testing whether the rally can sustain.

The MERVAL’s rebound mirrors 2024’s 172% surge before this year’s 16.55% slump, a pattern underscoring Argentina’s high-beta status.

With tariff tensions easing and Milei’s reforms advancing, traders now watch whether AR$84.1 trillion ($74.39 billion) in market cap can rebuild toward January’s AR$102.1 trillion ($90.3 billion) peak.