The Big Three
The Merval plunged approximately 5% to the 2,855,000 area in a sharp selloff that confirmed Tuesday’s failed breakout above 3 million as a classic bull trap. The decline erased the entire prior week’s rally and pushed the index back toward the critical support cluster at 2,833,716–2,859,328 — the convergence of several key moving averages.
Argentine equities are the most expensive in Latin America and the earnings are not following. The Merval trades at a forward P/E of 19.8x — above Brazil’s Ibovespa (13.4x), Chile’s IPSA (15.6x), and Mexico’s BMV (15.9x). Bloomberg Economics cut its 2026 GDP growth estimate to 2.0% from 3.2%, and Argentine stocks have underperformed the MSCI Latin America index, which is up over 20% year-to-date.
The global risk-off move amplified local selling pressure. Emerging market sentiment weakened on the Liberation Day tariff anniversary, Middle East tensions pushing oil toward $100, and renewed uncertainty about U.S. monetary policy. Argentina’s small, illiquid equity market is particularly vulnerable to ETF outflows — roughly US$200 million exited Argentine equity funds in 2025, and passive flows have yet to return consistently.
01 Market Snapshot
| Indicator | Value | Change |
| Merval Close (approx.) | ~2,855,000 | ~−4.8% |
| Prior Close (Apr 1) | 2,999,341.73 | +0.05% |
| 2-Day Drop from 3M High | ~163,000 pts | ~−5.4% from 3,018K |
| USD/ARS | ~1,400 | peso weakening |
| Forward P/E (Merval) | 19.8x | LATAM’s most expensive |
| GDP Growth (2026 est.) | 2.0% | cut from 3.2% |
| Monthly CPI | ~2.5% | sticky |
| 2026 Debt Maturities | US$19B+ | peaking soon |
02 Equities — The 3-Million Bull Trap Delivers Pain
The Merval Argentina today suffered its worst session in weeks, plunging approximately 4.8% to the 2,855,000 area in a broad-based selloff. This is part of The Rio Times’ daily coverage of the Argentine stock market and Latin American financial markets.
Tuesday’s failed breakout above 3 million — the index briefly touched 3,018,034 before closing at 2,999,342 — proved to be a textbook bull trap. Wednesday’s sharp decline punished buyers who chased the breakout, with YPF, Grupo Financiero Galicia, and Transportadora de Gas del Sur leading the decline. The session erased more than a week of gains in a single day, and the index is now testing the critical moving average cluster at 2,833,716–2,859,328.
The valuation warning from Buenos Aires Times was prescient: the Merval‘s forward P/E of 19.8x is the highest in Latin America, yet Argentine corporate earnings have not kept pace with the index’s 29% 12-month gain. Milei’s reforms have succeeded in slashing inflation and stabilizing the fiscal position, but these macro wins are yet to translate into a durable corporate earnings cycle. Argentine stocks are, as Balanz Research’s Ezequiel Fernández noted, “no longer particularly cheap.”
03 The Earnings Problem
The fundamental issue behind Wednesday’s selloff is the growing disconnect between Argentina’s reform narrative and corporate reality. While the MSCI Latin America index has rallied over 20% year-to-date — its best start since 1994 — the Merval has underperformed, down approximately 8% from its January all-time high. Much of the LATAM rally has bypassed Argentina, flowing instead into larger, more liquid markets like Brazil and Mexico through passive ETF allocations that Argentina’s small market cannot absorb efficiently.
Bloomberg Economics’ downgrade of 2026 GDP growth to 2.0% from 3.2% underscores the challenge. Agriculture, energy, and mining are carrying the economy while manufacturing, construction, tourism, and retail lag — precisely the sectors where Merval-listed companies have their largest exposure. The removal of remaining capital controls, a prerequisite for potential re-entry into major emerging market indexes, remains incomplete. Until that happens, Argentina will continue to miss out on the passive flow tailwinds supporting its peers.
04 Technical Analysis — Merval Daily
The Merval has fallen sharply to approximately 2,855,000, landing directly on the critical support cluster formed by several intermediate moving averages in the 2,833,716–2,859,328 zone. This is the index’s first major test of support since the rally from March lows. The 50-day moving average at 2,906,542 has been decisively broken, converting it from support to resistance.
The MACD remains technically positive at 44,105 but the histogram at −14,085 was already showing deceleration before Wednesday’s selloff — it will have worsened significantly. The RSI, which was approaching overbought at 65.28 on Tuesday, has likely plunged toward the 50 neutral zone or below. The secondary oscillator at 50.61 was already neutral. Below the current support cluster, the next major level is 2,767,308, followed by the 200-day moving average at 2,497,032. The long-term uptrend remains intact as long as the 200-day holds, but the short-term picture has turned decisively bearish.
05 Key Levels
| Level | Merval |
| All-Time High (Jan 28) | 3,296,502 |
| 3-Million / Failed Breakout | 3,018,034 |
| 50-Day MA (now resistance) | 2,906,542 |
| Current Close (approx.) | ~2,855,000 |
| MA Cluster / Support 1 | 2,833,716–2,859,328 |
| Support 2 | 2,767,308 |
| 200-Day MA | 2,497,032 |
06 News in Focus
Milei’s Reforms Real But Earnings Are Not Following
The fundamental paradox of Argentine equities in 2026: Milei’s macro stabilization is genuine — inflation down from 219.9% to around 31%, fiscal surplus achieved for the first time in 14 years, poverty reduced from 53% to 32%, labor reform passed, privatizations launching. But corporate earnings have not kept pace. Fourth-quarter results currently being reported will test whether the reform premium is justified at 19.8x forward earnings. Agriculture and energy are performing, but consumption-linked sectors remain depressed as subsidy cuts raise utility and transport costs. The “easier” austerity has been done; every additional peso of spending cuts is more socially and politically expensive.
Growth Downgrade Weighs on Sentiment
Bloomberg Economics cut Argentina’s 2026 GDP growth forecast to 2.0% from 3.2%, citing “slower momentum” heading into the year. The IMF projects 3.5% and Allianz Trade expects a similar figure, but those estimates were made before the latest revenue data showed seven consecutive months of underperformance. Tax receipts fell 10% in real terms in February alone. The two-speed economy — energy and agriculture thriving while manufacturing, construction, and retail struggle — is a structural challenge that rate cuts and reform legislation cannot quickly resolve.
ETF Outflows and Liquidity Constraints
Argentina’s equity market remains small relative to regional peers and struggles to absorb large passive allocations. After US$630 million in inflows in 2024 — the largest in a decade — approximately US$200 million flowed out in 2025. The removal of capital controls, a prerequisite for potential re-entry into MSCI emerging market indexes, remains incomplete. Until Argentina achieves full index inclusion, it will continue to miss the tailwind of over US$50 billion in EM inflows that have boosted Brazil, Mexico, and Chile this year.
07 Global Context
Wednesday’s selloff was amplified by global risk-off flows on the Liberation Day anniversary. The broader EM complex weakened as oil prices pushed toward $100 on Middle East tensions, reviving stagflation fears in the United States. The peso’s continued depreciation within the inflation-linked crawling band adds to the effective cost of holding Argentine equities in USD terms — the Merval’s 29% ARS gain over 12 months translates to a far more modest return after the peso’s ~30% depreciation. The Trump–Milei alliance remains a political tailwind, and the US Treasury swap facility provides institutional credibility, but these factors are already priced into the current P/E multiple.
08 Looking Ahead
The Merval’s immediate fate rests on the 2,833,716–2,859,328 support cluster. A hold here would suggest the selloff is a healthy correction within the broader uptrend; a break below would open the path to 2,767,308 and potentially a test of deeper support. Recovery above the 50-day MA at 2,906,542 would be the first sign that buyers are returning.
Q4 earnings season is the key near-term catalyst — if results show the beginnings of an earnings recovery, the valuation concern eases. The next inflation print will determine whether monthly CPI is resuming its downward trend from the sticky 2.5% level. The privatization calendar — freight rail, water utility, postal service — will test execution risk. And the debt maturity schedule, with over US$19 billion due in 2026, keeps the refinancing question front and center. The reform story is intact, but the market is demanding proof that macro stabilization is translating into corporate profitability. Until that proof arrives, 3 million points will remain the ceiling.
09 Verdict
Wednesday was a reckoning. The Merval’s ~5% decline was the sharpest single-session drop since the rally began, and it delivered a clear message: the market has reached the limit of what policy optimism alone can justify. At 19.8x forward earnings — the highest in Latin America — Argentina needs corporate profitability to validate the reform premium. So far, the evidence is thin: GDP growth has been downgraded, tax revenues are declining in real terms, and consumption-linked sectors are still feeling the pain of subsidy cuts.
Bias: Bearish near-term, medium-term on watch. The 3-million bull trap is a powerful technical signal — a failed breakout at a round number followed by a 5% decline resets sentiment decisively. The MA cluster at 2,833,716–2,859,328 is now the line in the sand. A hold there keeps the correction contained; a break accelerates selling toward 2,767,308. The medium-term reform narrative is still valid — Milei’s labor reform, privatizations, and IMF backstop are real structural improvements. But the market is telling us it needs time and earnings before the next leg higher. Do not buy the dip until the support cluster holds for at least two consecutive sessions.
This report was published by The Rio Times. For daily coverage of Latin American markets, read our Latin American Pulse and Brazil Morning Call.
Deep Dive
For the complete picture, read our in-depth guide: Latin America Stock Markets 2026: Ibovespa, Merval, COLCAP, IPSA and IPC Guide