The truce between the United States and Iran lit a light of hope in the financial market. The cessation of hostilities during two weeks gives a respite to global assets: last night, after Donald Trump’s announcement and the confirmation of his Iranian adversaries, they rebounded in aftermarket operations and the price of oil plummeted. Now, days of volatility are expected, with increases in most of the papers but decreases in those linked to the energy sector. Traders warn that caution will not completely disappear yet.
The strongest reaction was observed in the international price of oil, with collapses of up to 18% in WTI futures and 12% in Brent futures. The futures of the main stock assets also reacted to the rise and anticipate a very positive day. The S&P 500, the most representative index of stocks on Wall Street, rose more than 2% in the futures market. At the same time, the Asian stock markets, active on traditional trading days due to the time difference, rose to 6.5%led by those of South Korea and Japan.
In the crypto segment, Bitcoin also showed its reaction with a rapid rise of 5% to exceed $70,000. The same thing happened with Ethereum, which rallied 7% until it is again above US$2,200. The crypto market is thus partially recovering after several negative weeks, punished by the growing aversion to global risk and the consequent flow towards safer positions.
The Argentine market will not be left behind: local stock assets are expected to be infected by the global celebration. However, in the short term, the truce in the Middle East would not be good news for energy stocks and everything related to oil, which in recent weeks benefited from the rise in the international price of crude oil and would now suffer the correction. In any case, everything will be tied to the news that arises from the participants in the conflict and, above all, the reopening of the Strait of Hormuz, whose closure impacted a lower global energy supply.
Regarding the exchange market, everything indicates that the status quo will be maintained: the peso would remain strong in the coming months and the Central Bank would maintain the reserve purchasing streak, which It is already close to US$4.6 billion so far this year.
Above all, taking into account that the season of liquidations of the thick harvest is about to begin, so the greater supply of dollars will add more calm. Furthermore, the exchange market resisted global pressure very well and Now you have less reason to stress.
How much could the price of oil fall after the truce?
According to Daniel Montamat, former Secretary of Energy and former president of YPF, if energy flows are restored after the opening of the Strait of Hormuz, The international price of oil could continue to fall rapidly below US$90 and even to the area of US$80 per barrel.. Although he believes that even with a reduction in the conflict it will not be easy to reestablish the usual flow, after a while the price could compress to the zone of US$70, similar to what it was before the escalation of war.
Market operators also believe that for now it seems unlikely to see oil at levels similar to those it was trading at until the end of February, before the United States and Israel attacked Iran. They estimate that crude oil could continue to decline, but until there is greater certainty regarding the conflict and recomposition of the global energy flow, the price would remain relatively high, above pre-war levels.
This expectation takes away a certain negative weight from the actions of Argentine energy companies, such as YPF, Vista and Pampa, among others. Although in the short term a decline in its stock prices is expected (last night, in the aftermarket on Wall Street, YPF fell almost 12%), the price of oil still at relatively high levels would help prevent the decline from being so pronounced. Furthermore, beyond the price of crude oil, the medium-term prospects for these companies are positive due to the strong growth in production in Vaca Muerta.
Rebound on Wall Street but with caution due to pending risks
Financial analyst Gustavo Ber estimates that while the outlook becomes clearer there could be a rebound of around 5% in the S&P 500 indexas a “relief-rally”, waiting for the market to be able to evaluate the impacts that there will be on economic activity and inflation. He warns that investor caution will continue to be present, so the celebration will not be complete, pending further definitions from those involved in the conflict.
“The expectation of a temporary agreement, while negotiations continue or a more formal agreement is negotiated, was on the table. In fact, yesterday the market began to recover in the middle and finally came the acceptance of the proposal that Pakistan brokered. In the short term, oil will continue to decline, but it will remain at high levels. Perhaps this Wednesday it will operate between 10% and 15% belowbut it would remain there and with the possibility of some rebound,” adds Gustavo Neffa, director of Research for Traders.
Neffa warns that the recovery of energy supply will take time, but it greatly decompresses the risk scenario for financial assets. At least, he highlights, with the truce time is gained and the market will feel relief for two weeks, as long as there is no mutual aggression. In fact, he considers it “worrying” that “10 minutes after the United States announced that there was an agreement for two weeks, Iran sent missiles to Israel.” Therefore, “it seems that this still does not end here.”
Martín Genero, from Clave Bursátil, believes that the positive reaction will be widespread, but it will occur mainly in the assets that contain the greatest risk, which were the most punished in recent weeks, and not so much in the conservative ones. For example, technology companies will probably rebound more than industrial companies in the United States and emerging markets will also climb more than Wall Street.
Genero also estimates that in the short term Argentine bonds in dollars will operate in positive territory and the country risk would fall again below 600 basis points. The rebound in local debt securities would be explained by less risk aversion on the part of investors, in addition to lower inflation expectations at a global level, since in inflationary scenarios, bonds need higher interest rates (lower prices) to be in demand.
Argentine energy companies in red: time to rotate towards technology
“We must remain cautious, because there are also many macro issues in the United States that prevent us from claiming victory and becoming completely greedy. We must be prudent. With the correction of oil, there will come a drop in energy stocks. Shares of companies like Vista and YPF are going to perform poorly compared to the rest of the local companies. Likewise, it may be a good time to rotate towards technology companies that have been falling for several months, such as Microsoft or Meta,” says analyst Gastón Lentini.
Lentini maintains that there is still the corporate balance sheet season, which will help provide a guide for investment decisions in variable income. In any case, he emphasizes, “prudence must prevail because we do not know what the outcome of the conflict will be” and because “the United States continues to spend more on debt and interest on its debt than it spends on weapons and defense, a consequence of having an extremely high fiscal deficit.”
