Foreign banks are one of the best-performing industry groups Monday, as most world markets climb and Argentina-based banks lead the group following a deal with the International Monetary Fund.
Officials in Buenos Aires lifted critical elements of their currency controls and loosened restrictions on the Argentine currency, reports said.
The moves are part a $20 billion package, which the IMF said is designed to bolster the country's monetary and foreign exchange regime. It is aimed at "greater exchange rate flexibility ... and advancing a broad range of structural reforms to foster a more dynamic, market-oriented economy."
Argentina's Merval stock index rose 1.2% Monday afternoon in New York. The Global X MSCI Argentina ETF jumped 5.7%, gapping above the 50-day moving average, although it pared morning gains. ARGT stock jumped 6.5% on Friday.
Several Argentine bank stocks broke out of downward price trends, clearing trendlines drawn from their early-January highs.
Grupo Financiero Galicia gapped up 13% in heavy volume intraday. Grupo Supervielle rallied 15%, while Banco BBVA Argentina gapped up almost 14%. All are ARGT holdings.
All three bank stocks climbed back above their 50-day lines and already have the highest IBD Relative Strength Ratings of 38 stocks in the foreign banks industry group, in the high 90s.
Banco Macro, another Argentine bank, also gapped above its 50-day line with a near-15% gain. Its Relative Strength Rating is a bit lower, at 88.
With the IMF-related moves, Argentina's peso fell about 10% to trade at 1,179 per dollar, according to pricing data compiled by Bloomberg. Sovereign bond yields on benchmark notes due in 2035 fell to 11.6%, Bloomberg reported.
Foreign Bank Stocks Lead Market
Out of 197 industry groups, IBD's foreign banks were Monday's third-best performing. The group has been in the top 20 for about a month, although it remains more than 6% below its March 25 peak.
It wasn't just Argentina driving world bank stocks. Some tariff relief the White House offered over the weekend brought out buyers across global stock markets. Gains faded on Wall Street, however.
India-based Icici Bank edged higher Monday but continued to work on a cup-with-handle base with a 31.99 buy point. Icici will report earnings Saturday, according to FactSet. Analysts expect earnings of 39 cents a share, up 8%, on revenue of $3.26 billion, up 9%.
HDFC Bank, another India-based bank, broke out past the 67.12 buy point of a cup with handle on Friday and remained in buy range Monday. HDFC also will report earnings Saturday. The consensus profit estimate is 79 cents a share, an increase of less than 2%, per FactSet. Revenue is seen falling 13% to $4.906 billion.
Banco Santander-Chile is also regaining its 50-day moving average. Shares rose 1.9% Monday.
The money-center banking group was in the top 20 on Monday. In that group, Toronto-based TD Bank rose back above its 50-day moving average. While a move above the 50-day line can be a buy signal, keep in mind that the stock market remains at high risk.
TD stock has a 21-day average true range (ATR) of 2.3%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior.
Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs. In the current, unpredictable market, IBD suggests stocks with ATRs of 3% or below.
The ATR for Icici Bank is 2.2% and HDFC's is 2.54%.
Argentina bank stocks, however, are more volatile. Grupo Financiero Galicia has an ATR of 7%, Banco BBVA 7.57%, Banco Macro 7.31% and Grupe Supervielle 8.42%.
