What began as a strong week for Argentine assets on Wall Street lost momentum over the last two trading sessions. Most Argentine companies listed in New York closed lower on Friday, led by declines in Mercado Libre (-2.35%), Telecom Argentina (-1.43%), and Cresud SACIF (-1.38%).

Meanwhile, the country risk index compiled by JP Morgan ended the week hovering above 418 basis points. The increase pushed it further above the 400-point floor, a key threshold that would allow the Milei administration to access international financing at lower interest rates.

The development was driven not by measures taken by President Javier Milei’s administration, but by actions carried out by his closest ally, U.S. President Donald Trump.

On Friday, the United States launched attacks on bridges in Iran, while Tehran retaliated by striking a power plant and a desalination facility in Kuwait. At sea, U.S. Marines boarded an oil tanker near the Strait of Hormuz, while unidentified armed men seized another vessel off the coast of Yemen.

Rising volatility and benefits for one sector

Leonardo Svirky, sales trader at brokerage firm Becerra Bursátil, told the Herald that the renewed conflict in the Middle East is generating significant market volatility.

“It’s very complicated. One moment it looks like things are being resolved, and the next it seems they’re not. That’s what makes it dangerous,” he said.

While most ADRs — American Depositary Receipts, which are shares of foreign companies traded on the New York Stock Exchange — are under pressure, Argentine energy stocks are driving the local Merval index. The reason is the sharp rise in Brent crude oil, the global benchmark used across much of the world, including Argentina.

The index rose more than 4% on Friday, bringing its weekly gain to 15.6%, its strongest weekly increase since mid-April. 

Migliore explained that, on one hand, the “widespread weakness” seen across international markets, particularly emerging markets, reflects a global environment of “heightened risk aversion.”

On the other hand, the renewed rally in oil prices, driven by the latest escalation of the conflict in the Middle East, “has renewed investor interest in local energy companies.”

Pablo Lazzati, CEO of brokerage firm Insider Finance, said that higher oil prices are “particularly benefiting” energy companies such as YPF, Pampa Energía, and Vista Energy.

“Expectations of higher revenues and wider profit margins are supporting these companies’ share prices,” he emphasized. Vista Energy’s ADR rose 2.6%, YPF’s gained 2.5%, and Pampa’s advanced 0.26%.

Migliore added that “this decoupling had already been evident in previous sessions of the current military escalation” when the local energy sector managed to cushion part of the losses affecting other sectors.

“This global backdrop is not helping at all,” Svirky said, stressing that the recent rise in country risk is not due to any “local risk.”

Lazzati, meanwhile, noted that investors in the local market continue to wait for a further decline in Argentina’s country risk. “Until that happens, it will be difficult for local stocks to stage a broader and more sustained rally,” he said.