Chile’s S&P IPSA stock index surged 2.03% to close at 10,856.29 on Tuesday, April 1, 2026, establishing a new all-time high. The index opened at its session low of 10,640.08 and rallied consistently throughout the day, closing at its high. The market celebration is tied to the pro-business agenda of President José Antonio Kast, who assumed office on March 11, 2026, and quickly moved to align Chile’s economy with Washington’s supply chain priorities. **Who Benefits From the New Order** On his first day in office, President Kast signed a critical minerals cooperation memorandum with the United States, focusing on copper and lithium, integrating Chile into Washington’s supply chain security framework. This marks a shift from the previous Boric administration's state-centric mining model towards greater private-sector involvement. Chile's inflation rate fell to 2.4% in February 2026, below the Central Bank’s 3% target and the lowest since August 2020. Core inflation in December 2025 was 3.3%. The Central Bank maintained rates at 4.5% in January 2026. The country’s GDP growth for 2025 was 2.5%, and copper prices are elevated at approximately $4.70 per pound. But the broader picture is less polished than the stock chart. The Imacec economic activity index contracted by 0.3% in February 2026, marking the second consecutive monthly decline and the first back-to-back contractions since April–May 2023. Industrial production has also contracted for five consecutive months. **The Reform Machine** President Kast has consolidated the economy and mining portfolios under Minister Daniel Mas, aiming to streamline the permitting process for Chile's $105 billion mining investment pipeline through 2034, which currently faces a bottleneck of over 500 approvals. Copper production in 2025 decreased by 2%. The NovaAndino joint venture between state copper giant Codelco and lithium producer SQM, cleared by China’s antitrust regulator in November 2025, is progressing and is expected to allow lithium extraction from the Atacama salt flat until 2060, supporting Chile's goal to double lithium production by 2031. Ten decrees are currently being processed to enable additional lithium projects in northern Chile. President Kast has proposed US$6 billion in spending cuts within 18 months, equivalent to 1.9% of GDP, through measures such as eliminating misuse of public resources and improving state efficiency. The 2026 budget aims to comply with Chile’s fiscal responsibility rule, though the IMF has cautioned that it relies on optimistic revenue assumptions. Chile maintains a moderate gross public debt and an investment-grade credit rating. **The Limits Beneath the Rally** The Iran conflict is complicating the economic outlook, with the Central Bank warning that higher international fuel prices, with Brent crude above $92, could lead to a significant inflation increase in the second quarter of 2026. The government’s mid-March 2026 fiscal spending adjustment also adds uncertainty. Two-year inflation expectations remain anchored at 3%. Morgan Stanley had raised its IPSA price target to 10,900 for mid-2026, a level the index approached a session early. JPMorgan recently downgraded Chilean equities to Neutral from Overweight, suggesting that the "Kast premium" may be largely priced in. The technical analysis of the IPSA shows the index trading above all key moving averages, with the 50-day moving average near 10,540 and the 200-day moving average near 9,644. The Bollinger Bands indicate the index pressing against the upper band at 10,857. The MACD is positive, and the RSI is bullish at 59.83, with room before reaching overbought territory. A fragmented parliament, with a divided Congress and a tied Senate, suggests that legislative deadlocks may constrain Kast’s more ambitious fiscal proposals. China, which accounts for approximately 39% of Chilean exports, continues to decelerate gradually, posing an external risk, although Chile's membership in the CPTPP trade bloc provides some diversification.
