Merval Crashes 5.5% Below USD 2,000 as AI Rout Hits Buenos Aires

Thursday’s 5.5% plunge was the Merval’s worst session since September 2025 and sliced through every technical support level that had held through the previous correction weeks. The catalyst was external: a global risk-off wave triggered by AI-disruption fears that sent the Nasdaq down 2% and hammered high-beta emerging market assets hardest. Argentine equities, with their concentrated banking exposure and thin liquidity during the summer months, amplified the move. This is part of The Rio Times’ daily coverage of Argentine markets and Latin American financial news.

The so-called “SaaSpocalypse” that has erased $285 billion from global software stocks since late January found its Argentine manifestation through Globant, which crashed 17.9% in New York. But the real damage was in financials: Galicia, BBVA, and Supervielle all lost more than 8% on the Buenos Aires floor, and their ADRs fell even further — Galicia dropped 11% and BBVA shed 9.7% in New York. Even Mercado Libre, which received a JP Morgan upgrade intraday and initially rallied 4%, could not hold gains and closed 0.5% lower.

The domestic narrative was paradoxically favorable. The Senate passed the labor reform bill with media sanción, Milei’s most significant legislative achievement since the Ley de Bases. The Treasury successfully rolled over 123.4% of its $8-trillion-peso maturity at Wednesday’s debt auction. And the BCRA continued buying dollars. Yet none of this mattered — the Merval priced in the reform weeks ago, and the global sell-off overwhelmed any domestic bid.

As analyst Matías Cattaruzzi at Adcap observed, the session’s dynamic was driven primarily by international forces rather than local factors. Rava Bursátil noted that volumes remained thin and the Merval continues to oscillate in a USD 1,900–2,100 range, with quarterly earnings revealing declining revenues and rising costs in sectors like construction.

The peso’s relentless march stronger continued on Thursday, with the dollar mayorista breaking below ARS 1,400 for the first time since October to close at ARS 1,395 — now 3.6% below where it started February and 4.1% below year-end 2025 levels. The BCRA’s exchange rate band ceiling stands at ARS 1,583.39, leaving the spot rate 13.5% below the cap and well within the comfort zone of the crawling band regime.

The BCRA purchased USD 141 million on Thursday, absorbing 35.3% of the USD 399 million in spot volume, extending its buying streak to 29 consecutive sessions with USD 2,047 million accumulated in 2026. This continued accumulation is remarkable given the peso’s simultaneous appreciation — a dynamic that reflects genuine private-sector dollar supply outstripping demand in the current account, aided by the agricultural export cycle and reduced import demand during the recessionary adjustment.

Gross reserves fell USD 251 million to USD 45,056 million, but this decline was almost entirely driven by the 3.1% drop in gold prices on Thursday (gold fell from above $5,060 to $4,949 per ounce on the global risk-off move) rather than actual outflows. The IMF concluded its second review mission this week, a positive signal for the continuation of the USD 20 billion program signed in April 2025.

The parallel market remains extraordinarily compressed. The blue dollar at ARS 1,440 represents a spread of just 1.76% over the official rate — a level of convergence that would have been inconceivable a year ago. The CCL at ARS 1,468 and MEP at ARS 1,417 continue their sixth consecutive session of decline. Economy Minister Luis Caputo has ruled out returning to international capital markets, emphasizing the government’s strategy of servicing debt from fiscal surpluses and reserve accumulation.

Sovereign bonds told a more nuanced story than equities on Thursday. While the headline risk number climbed 12 basis points to 514, this was significantly influenced by the rally in US Treasuries (which mechanically lifts EMBI spreads when Treasury yields fall). In absolute terms, dollar-denominated bonds were mixed: the short end held firm with the Global 2029 rising 0.1% and the Global 2030 gaining 1.1%, while the long end weakened with Global 2035 falling 0.5%, Global 2038 losing 0.7%, and Global 2046 dropping 0.9%.

The Bonares (local law) underperformed: AL29 fell 0.4% and has now lost nearly 10% year-to-date. The curve steepening — short-end resilience versus long-end weakness — reflects the market’s confidence in near-term servicing capacity but lingering uncertainty about the medium-term fiscal trajectory as election-year pressures approach.

The Treasury’s Wednesday auction was a clear success, rolling over 123.4% of the approximately $8 trillion peso maturity across 11 instruments, receiving $11.51 trillion in bids against $9.02 trillion placed. As SBS economist Juan Manuel Franco noted, the result will drain additional liquidity, reinforcing the monetary tightening cycle that has kept short-term peso rates elevated — with caución rates occasionally spiking to 80–100% in recent weeks.

S&P Merval Key Levels

Indicator Summary

The daily chart shows the Merval has now breached the lower Bollinger band and is sitting precisely on the long-term ascending trendline from the October 2024 rally origin. The RSI at 36.90 is approaching oversold territory but not yet at the extreme levels (below 30) that typically signal short-term bottoms. The MACD remains deeply negative with expanding histogram bars, confirming strong downside momentum with no divergence signal yet.

The 4-hour chart paints a more critical picture. Price has sliced through every moving average and the lower Bollinger band, with the RSI at 35.95 — the deepest oversold reading of 2026. The MACD histogram at −30,566 indicates panic selling velocity. The critical support zone lies between 2,829,000 (daily 200 EMA convergence zone) and 2,713,399 (4H lower Bollinger). A break below 2,829,000 would confirm a structural bearish shift and expose the daily 200 EMA near 2,418,594.

Key Facts

— Thursday crystallized the central paradox of Argentine markets in early 2026: the macro story has never been better in a generation, but the equity market is in freefall. The reform agenda is advancing (labor reform passed), the peso is strengthening (mayorista below 1,400 for the first time since October), reserves are accumulating at record pace (29 consecutive buying sessions, USD 2.05 billion in 2026), and country risk briefly pierced 500 bps — yet the Merval has cratered 13.5% from its January 28 all-time high.

— The explanation is structural, not fundamental. Argentine equities — overwhelmingly bank-weighted, illiquid in the Southern Hemisphere summer, and priced in a currency that is appreciating — are mechanically the highest-beta emerging market assets in the world. When the Nasdaq drops 2% on AI-disruption fears, Galicia drops 11%. This is not a repricing of Argentine risk; it is a mathematical consequence of portfolio construction and liquidity.

— The divergence between bonds (resilient, short-end rising) and equities (collapsing) is the tell. If this were an Argentine crisis, bonds would be leading the decline and the peso would be under pressure. Instead, bonds are firm, the peso is at multi-month highs, and the BCRA continues buying. The crisis is in Silicon Valley, not Buenos Aires.

— Friday’s US CPI release is the key variable. A print at or below 2.5% would reaffirm the Fed easing narrative, stabilize risk appetite, and likely trigger a relief rally in oversold Argentine names. A hot print would extend the pain. For positioned investors, the Merval at 2,850,000 — sitting precisely on its long-term trendline with the 4H RSI at deeply oversold levels — represents the most attractive entry point since the post-election correction, provided the global macro backdrop does not deteriorate further.

Key Facts

— Deep Dive

— For the complete picture, read our in-depth guide: Latin America Stock Markets 2026: Ibovespa, Merval, COLCAP, IPSA and IPC Guide

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