Stock markets in Mexico and the US lose in February

Pressured by the expectation of more interest rate hikes and weak quarterly reports from companies, the Mexican and US stock markets ended with losses in February, reversing January gains.

The stock markets in Mexico were placed in negative territory in a month that, according to analysts, was volatile. The S&P/BMV IPC, the main index of the Mexican Stock Exchange (BMV), fell 3.31%, to 52,758.06 points. The FTSE BIVA, from the Institutional Stock Exchange (Biva), lost 3.45% to 1,098.95 points. In the year they advance 8.86 and 8.06%, in that order.

The Dow Jones industrial average led the declines in the United States and ended with a loss of 4.19% in February. The S&P 500 and NASDAQ had smaller retracements (-2.61% and -1.11%, respectively). With this monthly close in the red, the Dow is down 1.5% in 2023, but the S&P 500 gains 3.40% and the NASDAQ 9.4%.

“There are two factors, mainly, that explain the monthly drop in the stock markets. On the one hand, the weak quarterly reports and, on the other, the volatility that returned to global markets in February due to the expectation that the Federal Reserve (Fed) and other central banks will continue to increase interest rates in the short term. term”, said Jacobo Rodríguez, director of Financial Analysis at Black Wallstreet Capital.

He recalled that much of the optimism seen in January was explained by the expectation that rate hikes would pause in the coming months, but with recent comments from some members of the Fed and inflation data, the expectations have changed and now the increases are expected to continue.

Jacobo Rodríguez explained that in the case of the Mexican stock markets, what did not help was that the financial reports for the fourth quarter of the companies were weak, in general terms, with strong pressure on profits due to the increase in costs and higher interest rate levels.

March, another difficult month

For this month that begins, considered Jacobo Rodríguez, it is anticipated that days of high volatility will continue in the stock markets. The inflation data will be key for the market.

The monetary policy announcements will continue to weigh on the performance of the stock markets, with the meetings of the Fed and the Bank of Mexico scheduled for March 22 and 30, in that order.

“Monetary policy announcements, with which an increase of 25 base points is expected in the case of the Fed, as well as the update of economic expectations, will be essential to find signs of how far the cycle of increases in the rate can extend. reference rate, which will impact the stock markets”, said Jacobo Rodríguez.

He even recalled that in recent years, March has been a volatile month for the stock markets and this 2023 will not be the exception.

In February, the companies with the highest performance were the insurance company Quálitas (+9.84%); Grupo Aeroportuario del Pacífico (+7.04%) and the airline Volaris (+3.28%). Those that ended with the largest monthly drop were Televisa (-20.50%), Megacable (-20.05%) and the mining company Peñoles (-18.43%).

So far in 2023, the S&P/BMV IPC accumulates a gain of 8.86 percent. Of the 36 companies that make it up, 26 registered increases in the price of their shares, for a joint gain in market value of 580.228 million pesos.

The gains in 2023 are led by Volaris, with a rebound in its titles of 33.11 percent. They are followed by Quálitas (+32.77%), Grupo Aeroportuario del Pacífico (+24.65%), the mining company Grupo México (+20%) and Grupo Aeroportuario del Centro Norte (+16.50%). Televisa earns 3.28 percent.

judith.santiago@eleconomista.mx