Market Overview
The Mexican stock market experienced a bearish session on Thursday, according to Bolsa Actinver. Both the S&P/BMV IPC and FTSE-BIVA indices, representing the Bolsa Mexicana de Valores and the Bolsa Institucional de Valores respectively, saw declines.
- S&P/BMV IPC dropped 1.15% to close at 57,894.82 points.
- FTSE-BIVA fell 1.08% to reach 1,168.41 points.
These declines marked the largest drop in nine days of trading, despite a positive weekly performance so far.
Economic Factors
The reduced risk appetite was partly due to Mexico’s inflation rate for the first half of May showing its highest increase since November and surpassing the desired range set by Banco de México.
Investors are assessing how price performance might influence the path of Mexico’s monetary regulator, which plans to continue reducing the reference interest rate.
Moreover, Mexico’s Gross Domestic Product (GDP) for March reported its first decline in three months compared to the previous period, falling short of analysts’ consensus expectations.
Political Developments
Mexico’s President Claudia Sheinbaum held a telephone conversation with U.S. President Donald Trump on Thursday regarding trade between the two nations.
Sector Performance
Declines in the industrial, consumer goods and services, and basic consumer goods sectors pushed both stock market indices downward.
- Grupo Carso, an industrial conglomerate, gained 1.31% to 125.24 pesos.
- Pinfra, a toll road administrator, rose 0.66% to 215.74 pesos.
- Tequila producer Cuervo saw a 0.50% increase to 24.25 pesos per share.
On the negative side, Quálitas, an auto insurance company, fell 5.91% to 207.31 pesos.
Industrias Peñoles, a mining company, dropped 4.78% to 402.99 pesos, while Megacable closed 3.26% lower at 49.39 pesos.
Negative values outnumbered positive ones by 155 to 70, with 14 stocks remaining unchanged.
Expert Commentary
Enrique Covarrubias, Director of Analysis at Actinver Casa de Bolsa, stated that the Mexican stock market “operated with pessimism throughout the session” on Thursday.
Despite Thursday’s decline, the S&P/BMV IPC has shown a 2.9% gain in May and a 16.93% increase year-to-date.
Related News: U.S. Tax Reform Bill
What: U.S. Congress approves President Trump’s tax cut and spending plan.
Why it matters: Investors are concerned about the implications of this legislation for the U.S. economy as it moves to the Senate for review and potential approval.
