Market Snapshot is a weekly view from our portfolio managers, offering sharp, thematic insights into the trends shaping markets right now.
This week in numbers
Spain accounted for half of all economic growth in the European Union in 2024.
The approximate amount of carbon dioxide absorbed by the ocean each year.
Argentina’s year-on-year inflation rate fell in September (down from 292.2% in April last year).
Past performance is not an indicator of future performance.
Quote of the week
Many investors had been following the story without pulling the trigger, and this result may be the signal to jump in.
Chris Clube, Co-Portfolio Manager, Global Emerging Markets, on the result of Argentina’s midterm elections.
This week’s Market Snapshot
Milei’s midterm vote fires-up free-market overhaul
The Argentinian president’s party won by a landslide in a congressional vote this week, providing fresh impetus to his bold reform programme.
- Javier Milei and allies now have more than 100 seats in the lower house, but will need the support of smaller centrist parties to reach the 129 required to pass legislation.
- Argentina’s Merval index has risen 35% since the vote and the yield on the country’s 10-year sovereign bond has fallen 22%, following periods of extreme volatility this year.
- Milei is now in a strong position to push forward with his reform agenda of deregulation and potential dollarisation.
President Javier Milei’s party won a landslide victory in Argentina’s midterm legislative elections over the weekend, which should provide fresh impetus to his radical programme to overhaul the country’s long-troubled economy.
Polls expected the vote to be close following a series of scandals that had dented the government’s popularity and led to a run on the peso. The opposition Peronist party – which has dominated Argentine politics for three decades – won elections in a bellwether province of Buenos Aires in September, leading to investor jitters about weakening support for Milei’s reforms.
The US pledged a bailout package this month to shore-up the peso. It may have helped swing the midterm election, which saw Milei’s La Libertad Avanza party secure almost 41% of the vote. Milei and his allies now have more than 100 seats in Argentina’s lower house, but will need the support of smaller centrist parties to reach the 129 required to pass legislation. The picture in the Senate is broadly similar.
“With these midterm election results, Argentina is one step closer to solidifying the reforms made by Milei and increases the chance of solid structural change in the future,” says Chris Clube, Co-Portfolio Manager, Global Emerging Markets, Federated Hermes. “It makes investing in the country less of a binary bet and more of a fundamental one.”
Figure 1: Argentina’s Merval rebounds after bumpy year
“Many investors had been following the story without pulling the trigger, and this result may be the signal to jump in,” adds Clube. “The market will now look into how much Argentina’s GDP can grow following two years of shock therapy to combat inflation.”
The most recent IMF outlook forecast GDP growth of 4.5% this year1.
Milei was elected in November 2023 on a platform of economic liberalisation and fiscal and monetary conservatism – a radical break from Argentina’s interventionist past, characterised by excessive overregulation and unconstrained public spending. During his first two years in office he has implemented a severe austerity package which has helped tame the country’s chronic inflation crisis.
Argentina’s year-on-year inflation rate fell to 31.8% in September (down from 292.2% in April last year), while the monthly rate was 2.1% in September (from a peak of 25.5% in December 2023)2.
Clube observes: “Milei now has a real opportunity to deliver on his bold reform programme, but, since his party lacks a majority in the lower house, he will still need to work effectively and flexibly with other parties to pass key pieces of legislation.”
Figure 2: Argentina’s 10-year sovereign debt rollercoaster
Argentina’s benchmark Merval index has risen 35%3 since the vote and the yield on the country’s 10-year sovereign bond has fallen 22%4, following previous spells of extreme volatility.
“Investors were cautious at the start of this year, but the narrative has shifted dramatically,” says Jason DeVito, Senior Portfolio Manager for Emerging Market Debt. “Markets are now more confident in Milei’s ability to push forward with his reform agenda of deregulation and potential dollarisation.”
DeVito adds that the US financial backstop has added a layer of geopolitical and economic stability. “Whether or not this [stability] materialises, the election outcome signals a shift to a more fundamental investment case for Argentina,” he says.
“Milei’s grassroots popularity and strengthened political position give him the opportunity to influence policy meaningfully. For investors, this could be the beginning of a more sustainable path, provided his reforms are implemented effectively.”
2 Instituto Nacional de Estadística y Censos (INDEC)
3 Bloomberg as at 30 October 2025
4 Bloomberg as at 29 October 2025
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