Colombia Stocks Rally on Friday as Court Suspends Record Wage Decree

Colombian equities staged a strong recovery on Friday as the MSCI COLCAP surged 1.73% to close at 2,368.57, recouping the bulk of Thursday’s 2.00% decline. The session opened at 2,330.44, dipped to an intraday low of 2,313.38, then rallied through the session to close at the high of 2,368.57 — a bullish hammer-like pattern suggesting the near-term correction may be stabilizing. For the week, however, the index still posted a loss after the heavy selling earlier in the period.

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

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

Also tracking regional peers: Chile’s IPSA closed the same session.

Ecopetrol closed at COP 2,245 on Thursday, gaining 1.35% that session even as the broader index fell. The stock remains under pressure from the weak crude oil outlook — the EIA’s latest Short-Term Energy Outlook projects Brent averaging just US$58/bbl for 2026 — and Ecopetrol’s own updated Q4 2025 projections show revenues between COP 26–30 trillion, impacted by lower Brent prices. Ecopetrol president Ricardo Roa warned that the company may need to close some higher-cost production fields, estimating that each US$1 decline in Brent costs the company approximately COP 0.7 trillion in net income and COP 0.9 trillion in EBITDA. Credicorp Capital projects the 2026 dividend at approximately COP 135 per share, well below prior years.

Among the broader index constituents, Grupo de Inversiones Suramericana rose 0.48% to COP 58,180, while Grupo Cibest (Bancolombia) continued consolidating near COP 83,700 after its multi-month rally. The session’s notable laggards included Cementos Argos, which fell 3.94% to COP 12,200, and Organizacion Terpel, which declined 3.91% to COP 19,160. Corficolombiana also lost 3.73% to COP 18,600.

The minimum wage suspension by the Consejo de Estado is potentially the most significant corporate development of the week. Fitch Ratings had warned that persistently elevated interest rates combined with the historically large wage increase were limiting the financial flexibility of Colombian companies. A lower replacement wage decree could ease cost pressures across labor-intensive sectors — construction, retail and services in particular — while reducing the inflation trajectory that forced BanRep’s hawkish pivot. The government has eight days to issue a replacement decree, with discussions beginning Monday February 16.

The Colombian peso strengthened for the second session in three as the TRM dropped to COP 3,652.89 — the rate valid from February 14 through 17. This represents a COP 12.89 decline (−0.35%) from Friday’s COP 3,665.78 and extends the broader appreciation trend that has seen the peso gain approximately 2.8% year-to-date and 10.9% versus the same date in 2025. The peso touched COP 3,603.14 on February 2 — its strongest reading in over two years — and remains well anchored below the COP 3,700 level.

The primary catalyst was the softer-than-expected US January CPI report, released Friday morning. The Bureau of Labor Statistics reported headline inflation at 2.4% year-over-year — the lowest since May 2025 and below the 2.5% consensus — while core CPI came in at 2.5%, in line with expectations and marking the slowest annual pace since March 2021. Monthly headline CPI rose just 0.2%, below the 0.3% forecast, helped by a 1.5% decline in energy prices. The Dollar Index dipped 0.04% to 96.88, near multi-year lows, as markets boosted expectations for Fed rate cuts, now pricing a strong probability of a June cut with a second in the fall.

Brent crude settled marginally higher at approximately US$67.75 per barrel on Friday, supported by residual US-Iran tensions despite easing geopolitical risk premiums. However, oil posted its second consecutive weekly decline as the IEA cut its demand growth outlook and OPEC+ signaled a possible resumption of output increases. The EIA projects Brent averaging just US$58/bbl for 2026 — a significant headwind for Ecopetrol and Colombia’s fiscal position. Gold surged approximately 2.1% to around US$5,047 per ounce (April futures), reclaiming the US$5,000 level on the back of weaker inflation data and persistent safe-haven demand.

Friday’s 1.73% rebound produced a decisive green candle that reclaimed the 2,355 support zone and closed right at 2,368.57 — the session high. The index opened at 2,330.44, dipped to an intraday low of 2,313.38, then rallied strongly through the afternoon, printing a bullish hammer pattern that suggests the two-day selloff may have found a near-term floor. The close at the high reinforces the strength of the recovery and sets up a potential test of the 2,377 resistance zone at the start of the new week.

The moving average structure remains constructive on a medium-term basis. The 200-day SMA at approximately 1,910 sits well below current levels, confirming the primary uptrend is far from threatened. The index has reclaimed the EMA cluster in the 2,355–2,368 zone, which shifts back to dynamic support. The Ichimoku cloud continues to provide additional support in the 2,240–2,300 area, with the current close comfortably above the cloud top.

Momentum indicators are stabilizing after the recent deterioration. The RSI reads 62.72/52.25 — the primary reading has pulled back from the overbought zone but remains in the upper half, while the smoothed line at 52.25 hovers near the neutral 50 level, suggesting the correction has largely unwound the prior excess. The MACD histogram stands at −21.88, still in negative territory but slightly improved from Thursday’s −23.18, with the bearish crossover intact but showing early signs of deceleration. A sustained close above 2,377 would be needed to shift the short-term bias back to bullish.

The Consejo de Estado’s February 13 decision to provisionally suspend Decree 1469 — which had set the 2026 minimum wage at COP 1,750,905 (a 23.7% increase, the largest in history) — is the single most important domestic policy development since BanRep’s January 30 rate hike. The court ordered the government to issue a new decree within eight days, with the tripartite commission discussions set to begin Monday. Analysts widely expect any replacement to align more closely with traditional criteria: past inflation (5.1%) plus productivity growth, which would imply an increase in the 7–9% range rather than 23.7%. The ruling does not affect payments already made in 2026 and operates prospectively.

The macroeconomic implications are significant. The original 23.7% wage hike was the primary catalyst behind the surge in inflation expectations from 4.6% to 6.4% for year-end 2026, which in turn triggered BanRep’s aggressive 100-basis-point rate increase. A materially lower replacement wage decree would ease inflation pressures, potentially allowing the central bank to reverse course sooner than markets currently expect. Fedesarrollo had estimated that the 23% increase could destroy approximately 600,000 formal jobs, while Fitch Ratings warned that elevated rates and the wage hike were limiting corporate financial flexibility. A more moderate wage increase would address both concerns and improve the investment climate ahead of the March congressional and May presidential elections.

Externally, the US January CPI report dominated Friday’s market narrative. Headline inflation at 2.4% year-over-year — down from 2.7% in December and below the 2.5% consensus — represented the slowest pace since May 2025, with the BLS noting that energy prices fell 1.5% while shelter costs rose a modest 0.2%. Core CPI at 2.5% marked the smallest annual increase since March 2021. Markets responded by boosting Fed rate cut expectations, with June and September cuts now priced as the base case. For Colombia, the softer US inflation print is unambiguously positive: it weakens the dollar (supporting the peso), reinforces the global rate-cutting cycle (channeling flows into high-yielding EM assets), and eases the external pressure on BanRep’s policy calculus.