Merval Plunges 3.8% as Wall Street Drag Erases Labor Reform Rally

The Big Three

Market Snapshot

Equities & Corporate

The Merval shed 3.84% to close at 2,763,059, its worst session since late January. In dollar terms the index lost 3.9%, falling to ~1,919 points. The sell-off entirely reversed Friday’s +1.2% bounce that had followed the Diputados approval of the labor reform (135–115), underscoring how exposed Argentine equities remain to Wall Street’s mood swings. This is part of The Rio Times’ daily coverage of Argentine markets and Latin American financial news.

Mercado Libre led the carnage, falling 6.8% in New York as US tech sold off broadly. Aluar plunged 6.6% after the government removed the 28% antidumping tariff on aluminum imports, exposing the company to cheaper foreign competition. Loma Negra and Banco Supervielle both shed ~6%. Among the few positives in recent sessions, BYMA jumped 8.2% on Friday and Galicia gained 4.7% on reform-driven optimism — gains largely unwound by Monday’s close.

The reform still needs Senate ratification, expected Friday. Cohen Aliados Financieros noted that bond curves had shown weakness through most of the week, “reflecting tighter system liquidity,” with only late-session improvement. The Merval has now lost 16.2% from its January 28 all-time high of 3,296,502 in pesos.

Currency & Monetary Policy

The peso continued to strengthen on Monday. The mayorista fell ARS 5.50 to 1,370.50, its lowest since October 14, and now sits 16.8% below the BCRA’s band ceiling of 1,600.66. In February alone the official rate has dropped ARS 76.50 (−5.2%). The blue dollar shed ARS 5 to 1,425, while the MEP broke below 1,400 for the first time, closing at ~1,395. The CCL held flat at 1,440, keeping the brecha at a historic low of 4.8%.

The BCRA extended its streak to 34 consecutive buying sessions, adding USD 95 million on Monday for a 2026 total of USD 2,507 million — already 25% of its annual USD 10–17 billion target. Reserves hit USD 46,634 million, the highest level since October 2019, boosted partly by an inflow of USD 800 million from Santa Fe province’s December bond placement.

Consultora F2 (Andrés Reschini) warned that the peso’s rapid appreciation is reopening the “over-appreciation” debate. LCG echoed the concern, noting that Argentina’s current framework — exchange-rate anchor, fiscal surplus, and reserve accumulation — delivers short-term nominal stability but faces rising headwinds from falling tax revenue and growing pressure on real-exchange-rate competitiveness.

Technical Analysis — S&P Merval Dily

Monday printed a punishing bearish candle (O: 2,873,289, H: 2,874,962, L: 2,751,906, C: 2,763,059), slicing through the Ichimoku cloud and closing well below both the Tenkan-sen and Kijun-sen. The session low at 2,751,906 stopped roughly 45,000 points above the 2,696,612 Senkou Span B, suggesting that level remains untested and is the next line of defense.

Momentum is decisively bearish. The RSI has dropped to 42.31 / 37.50, nearing oversold territory for the first time since the October correction. The MACD is deep in negative territory at −28,334 / −37,601, with the histogram confirming accelerating downside momentum. This is the most bearish technical reading since the Merval bottomed in mid-2025.

The 200-day SMA sits at 2,433,490 — still 12% below current levels, which preserves the longer-term bull case. Immediate resistance is the cloud zone around 2,880,156–2,889,603. A recovery above 2,946,631 (Senkou Span A) would neutralize the near-term damage; failure to hold 2,696,612 on a closing basis would open the door to a deeper correction toward 2,500,000.

Key Levels

Global Context & Commodities

Wall Street was the primary contagion channel. The Dow shed 1.66% to 48,804.06, the S&P 500 fell 1.04% to 6,837.75, and the Nasdaq dropped 1.13% to 22,627.27 as markets digested the Supreme Court’s tariff ruling aftermath and Trump’s 15% Section 122 announcement. Argentine ADRs traded broadly in the red, led by Mercado Libre’s 6.8% decline.

Oil prices retreated, with WTI at US$65.76 (−1.5%) and Brent at US$70.40 (−1.3%), pulling back from six-month highs ahead of renewed US-Iran nuclear talks. For Argentina’s Vaca Muerta exports, Sailing Inversiones flagged the range of geopolitical scenarios: a diplomatic deal could push oil to US$55–60, while an escalation could send Brent to US$100+.

Gold hit a record ~US$5,168/oz, a tailwind for Argentine mining names amid the broader sell-off. The DXY dollar index fell 0.24% to 97.56, continuing its multi-month slide that has supported EM currencies including the peso. Trump’s Section 122 tariffs take effect today, though Argentina’s export basket has limited direct exposure.

Looking Ahead

The Senate vote on the labor reform is the week’s key domestic catalyst, expected Friday. If ratified, the law will face judicial challenges and implementation hurdles, but its passage would be a historic achievement for a government that started with minimal congressional representation. Market analysts noted that investors are demanding “structural signals” beyond the reform to push riesgo país sustainably below 500.

Nvidia earnings on Wednesday will set the global risk tone. Locally, the peso’s continued strengthening and the BCRA’s USD 2,507 million reserve build create a paradox: the FX story is bullish, but the Merval in dollars has turned negative on the year after Monday’s rout, despite a record reserve position. The over-appreciation debate flagged by F2 and LCG will intensify if the mayorista breaks below ARS 1,350.

Verdict

Argentina presents a striking divergence: the FX picture has rarely looked better — record reserves, collapsing brecha, a peso that won’t stop strengthening — while equities and sovereign spreads are telling a different story. The Merval’s 16.2% decline from its January ATH, combined with riesgo país stuck above 500, suggests the market has priced in the easy wins and is demanding the next catalyst.

Monday’s 3.8% drop was largely imported from Wall Street, but the inability of Friday’s labor-reform rally to stick reveals fragile local conviction. The RSI at 42/37 signals approaching oversold conditions, which could trigger a technical bounce, but without a sustained break above the cloud (2,880,000–2,946,000), the path of least resistance remains down.

The Senate vote Friday is the near-term binary event. A clean ratification could jolt the Merval back toward the cloud. A surprise complication would deepen the correction toward the 2,696,612 Senkou Span B support. Long-term bulls can point to the 200-day SMA at 2,433,490 as the structural floor — still 12% below — but the over-appreciation risk flagged by F2 and LCG is the elephant in the room for 2026.