Chilean Equities Face Technical Crossroads After Sell-Off

Chile’s S&P IPSA index dropped 1.28% on May 28, closing at 8,259.50, its steepest single-day decline since early April, according to Santiago Stock Exchange data.

The benchmark breached its 50-day moving average (8,069) for the first time since April 14, when a bullish crossover had fueled a 25.05% year-to-date rally. Trading volumes surged 18% above the 30-day average, signaling institutional unease.

Lithium producer SQM triggered the downturn, missing Q1 earnings estimates by 26% amid falling lithium prices. Shares fell 3.1%, dragging materials stocks.

Fertilizer firm Nitratos de Chile led decliners with a 5.95% drop, while food processor Carozzi surged 9.5% on short-covering. Retail giants Falabella and Ripley Corp fell 2.66% and 2.08%, respectively, reflecting consumer spending concerns.

Technical indicators flashed warnings. The Relative Strength Index slid from 65 to 58, erasing bullish momentum. The MACD neared a bearish crossover, while Bollinger Bands widened, indicating volatility.

Fibonacci retracement levels suggest immediate support at 8,150 (38.2% pullback from May’s peak). A close below 8,069 could trigger algorithmic selling.

Chile’s Q1 GDP growth of 0.7% outperformed expectations, but mining output fell 2.1% yearly. Copper prices stabilized at $4.30/lb after state agency Cochilco revised its 2025 forecast upward.

Pension funds injected $334.7 million into equities in April, targeting Banco de Chile and LATAM Airlines. Global markets offered little respite.

The S&P 500 fell 0.56% on Federal Reserve inflation concerns, while Japan’s Nikkei dropped 0.7% on tariff risks. Chile’s peso held firm at 937.42/USD, cushioning foreign investors.

Analysts highlight Monday’s session as pivotal. “The 50-day SMA break lacks conviction,” noted a Santiago trader. “Institutional flows must counter technical headwinds to preserve the bull run.”

The IPSA’s 2025 gain still leads Latin American peers, with Brazil’s IBOVESPA up 0.34% year-to-date.