Chile IPSA Reverses Sharply From Record High as Global Metals Rout Hits Santiago

SANTIAGO – Chile’s benchmark IPSA index touched a new all-time high of 11,693 points during Wednesday’s session before reversing violently to close at 11,425, shedding 1.58% in what traders described as a textbook bearish reversal candle.

The peso also swung wildly, briefly touching a new multi-year high of 852.92 per dollar before retreating to 862.39.

The spillover from last week’s historic precious metals crash, triggered by President Trump’s nomination of Kevin Warsh as Federal Reserve chair, continued to rattle commodity-linked markets.

Key Market Data

Performance Analysis

Wednesday’s session will likely be remembered as a pivotal day for the Santiago exchange. The IPSA opened at 11,609, surged to a fresh all-time high of 11,693.34 in early trading, then collapsed nearly 355 points from its peak to an intraday low of 11,338 before recovering slightly to close at 11,425.88.

The resulting candlestick pattern—a wide-ranging bearish reversal on elevated volume—suggests that buyers who pushed the index to record territory were overwhelmed by profit-taking and institutional selling as the session progressed.

The Chilean peso told a similar story of intraday volatility. USD/CLP plunged to 852.92 during the session, the strongest peso level since early 2022, before reversing to close at 862.39—a net bounce of 0.35% on the day.

The currency had been on a relentless appreciation trend, gaining roughly 15% from its April 2025 peak near 1,017.

On the weekly chart, the pair remains deeply entrenched in a downtrend with the RSI reading 24.73 on the stochastic component, suggesting the peso may be approaching short-term exhaustion despite the longer-term bullish case remaining intact.

The IPSA’s weekly RSI has reached 83.67, its most overbought reading in years, even as the index has now rallied over 60% from its levels of a year ago.

Banking stocks and materials companies like SQM and Falabella, which led the rally through January, saw notable selling pressure as investors locked in gains after what has been the Santiago exchange’s strongest run since 1993.

Key Drivers

The primary external catalyst for Wednesday’s reversal was the ongoing global metals rout triggered by President Trump’s January 30 nomination of Kevin Warsh as the next Federal Reserve chair.

Silver suffered its worst single-day decline since 1980, plunging more than 30%, while gold shed roughly 9% from record highs. Copper, Chile’s most critical export commodity, has been caught in the downdraft, falling approximately 15% from its all-time high to slip below $13,000 per metric ton.

Bloomberg reported on February 5 that copper extended losses as rising inventories at London Metal Exchange warehouses and waning Chinese spot demand compounded the broader commodities selloff.

The Warsh nomination sent the U.S. dollar sharply higher as markets repriced expectations for Federal Reserve interest rate policy.

Warsh, a former Fed governor perceived as more hawkish than alternative candidates, eased long-standing fears about political interference in monetary policy but simultaneously raised the prospect that interest rates will remain elevated for longer.

For Chile, the stronger dollar presents a headwind for the peso’s rally, though the currency’s fundamental support from high copper prices and improved domestic conditions has so far limited the damage.

Domestically, the fundamental backdrop remains constructive. The Central Bank of Chile held rates steady at 4.50% on January 27, citing inflation converging toward the 3% target and broadly supportive external conditions.

GDP growth of 2.0-3.0% is projected for 2026, with investment momentum expected to broaden under the incoming Kast administration. However, the central bank flagged persistent geopolitical, fiscal, and financial risks that could disrupt the positive trajectory.

Technical Outlook

The IPSA’s intraday reversal from 11,693 to close at 11,425 forms a bearish shooting star pattern on the daily chart, typically a signal of distribution at the top of an uptrend.

The daily MACD histogram has turned negative at -28.24, suggesting momentum is fading. With the weekly RSI at 83.67—well into overbought territory—a period of consolidation or further pullback toward the 11,050-11,280 zone would be healthy before any sustained push higher.

For USD/CLP, the pair remains below all major moving averages on the 4-hour chart, and the weekly downtrend is firmly intact. However, with the weekly RSI stochastic at 24.73, a short-term bounce toward the 875 resistance area cannot be ruled out before the downtrend resumes.

Analyst Perspectives

Morgan Stanley, which had previously raised its mid-2026 IPSA price target to 10,900 under its “Andean SPRING thesis,” now finds the index has already overshot that level by more than 5%.

The firm’s analysis highlights that attractive Chilean peso valuations and the pro-growth reform agenda under the Kast administration support a structurally bullish case, though P/E valuations at 11.2x suggest less asymmetric upside at current levels.

Gregory Shearer, head of Base and Precious Metals Strategy at J.P. Morgan, noted that copper’s fundamentals remain supportive despite the recent selloff.

“We project a global refined copper deficit of approximately 330,000 metric tons in 2026, creating an even tighter market,” Shearer said, adding that data center demand for copper could reach 475,000 tons this year alone. J.P. Morgan forecasts copper averaging $12,075 per metric ton for the full year of 2026.

Looking Ahead

Wednesday’s sharp intraday reversal from record highs serves as a warning shot that the IPSA’s parabolic rally may be entering a more volatile phase, even as the medium-term fundamental case for Chilean equities and the peso remains compelling.

Investors will be watching Friday’s CPI data and the global commodities complex closely for signals on whether this week’s turbulence marks a healthy correction or the beginning of a deeper pullback.

Data as of February 5, 2026, 08:29 UTC. Sources: TradingView, Banco Central de Chile, Bloomberg, Trading Economics, J.P. Morgan Research.

This is part of The Rio Times’ daily coverage of Chilean markets and Latin American financial news.

For context on regional markets, see Brazil’s Ibovespa for the same session.

Also tracking regional peers: Colombia’s COLCAP closed the same session.

This article was drafted with automated assistance and reviewed before publication. How we use AI · Report an error