Argentina’S MERVAL Reverses Rally As Profit-Taking And Technical Signals Weigh

(MENAFN- The Rio Times) According to the Buenos Aires Stock Exchange, the S&P MERVAL Index closed May 7 at 2,059,914.88 ARS, down 3.29% after a 3.4% uptick the prior session.

Investors booked gains following the U.S. Federal Reserve's decision to hold rates steady, while Europe's STOXX 600 fell 0.7% and Asia's markets slipped 0.1%.

Local inflation remains elevated at 55.9%, and the central bank maintains a 29% overnight repo rate. The International Monetary Fund affirmed its 5.5% GDP growth forecast for Argentina in 2025, citing renewed market confidence amid tighter fiscal policy.

Technical indicators signal bearish momentum. The MERVAL trades below its 50- and 200-day simple moving averages, which lie near 2.17 million and 2.24 million ARS respectively.

The 14-period Relative Strength Index hovers around neutral at 53, while the MACD sits in negative territory, reinforcing the downtrend. Bollinger Bands widened after yesterday's reversal, with the index testing support near the lower band at 2.035 million ARS.



Key resistance levels stand at 2,130,000 and 2,180,000 points, where the 20-day simple moving average and the Ichimoku cloud converge. Trading volumes remained solid but failed to arrest the slide, suggesting cautious participation.

Global X MSCI Argentina ETF (ARGT) saw subdued flows, mirroring mixed foreign sentiment toward Argentine equities. Five biggest winners from the prior session highlight pockets of strength. Celulosa Argentina surged 13.39% on robust pulp-export forecasts.

Dycasa rose 3.37% after upbeat retail sales data. Rigolleau advanced 2.60% on signs of a construction rebound. Mirgor led weekly gains with a 3.0% advance after stronger electronics demand. Laboratorios Richmond added 3.2% on growth in pharmaceutical exports.
Latin American Markets Face Mixed Sentiment
Conversely, the energy sector endured the steepest declines. YPF and Pampa Energía fell sharply amid profit-taking after an $8 billion energy-surplus forecast. Utilities lost 5.70%, with Edenor among the hardest hit.

Materials shares dropped 5.41%. Financials lagged as the yield curve steepened, and industrial stocks also slumped. Benchmark peers displayed greater resilience.

Brazil's B3 index ended nearly unchanged at 133,516 points, supported by consistent foreign inflows. Mexico's IPC moved marginally lower as investors awaited domestic rate-decision cues.

Looking ahead, traders eye potential tweaks to Argentina 's managed-float exchange-rate band and upcoming corporate earnings. A break below two million ARS could trigger further selling, while a hold above support might signal a base for recovery.

In this volatile backdrop, market participants remain vigilant for catalysts that can break the recent pattern of profit-taking and steer the MERVAL back toward longer-term moving averages.

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