Overview of the Mexican Market Performance
The Mexican stock market experienced a downturn on Thursday, reversing its three-day upward trend and retreating from historical highs following the release of timely third-quarter GDP data by INEGI for Mexico.
The S&P/BMV IPC, representing the Mexican Securities Exchange, dropped 0.73% to trade at 62,889.86 points. Meanwhile, the FTSE Biva, a prominent indicator of Mexico’s secondary stock market, fell 0.74% to reach 1,250.95 points.
Market Sentiment and Sector Performance
According to Monex analysts, there is an optimistic outlook among construction, mining, and financial companies. However, a cautious approach is observed in consumer goods sectors such as food, beverages, and retail. They noted, “There is a very optimistic sentiment among construction, mining, and financial companies; however, a conservative view in consumer goods (food, beverages, retail, and convenience stores) remains. The global view of capital flowing into emerging markets continues, which has positively supported the market since May.”
Economic Data and Peso Performance
The Mexican economy contracted by 0.3% on an annual basis in the third quarter due to a downturn in the industrial sector, as reported by the relevant data.
Peso’s Decline
The Mexican peso weakened against the US dollar during Thursday’s trading sessions. The local currency fell due to a strengthening US dollar and the release of data showing Mexico’s economic contraction in the third quarter.
The exchange rate weakened by 0.42%, reaching 18.5476 pesos per dollar, its weakest level in three weeks. The peso has now lost for the third consecutive session against a strengthened US dollar, as the Fed cooled expectations of another interest rate cut before year-end.
Market Reactions to Fed’s Stance
Following the Fed president’s statement that markets should not anticipate another rate cut this year, traders continued to adjust their positions.
Key Questions and Answers
- What happened in the Mexican stock market on Thursday? The Mexican stock market experienced a downturn, with the S&P/BMV IPC and FTSE Biva both declining due to a contraction in Mexico’s third-quarter GDP and a strengthening US dollar.
- Which sectors are optimistic, and which are cautious? Construction, mining, and financial companies exhibit optimism, while consumer goods sectors like food, beverages, and retail display a more cautious approach.
- What caused the Mexican peso to weaken? The peso depreciated against the US dollar due to a stronger greenback and data showing Mexico’s economic contraction in the third quarter.
- Why did the Fed’s stance impact the Mexican market? The Fed president’s statement that another rate cut is unlikely this year led traders to adjust their positions, contributing to the market’s downturn.
