The Mexican Stock Exchange rebounds due to interest rate differential between Mexico and the United States.

The main index of the Mexican Stock Exchange, the S&P/BMV IPC, ended the day up 0.59%, rising from 52,273.53 points yesterday to 52,582.89 units.

Mexican stocks closed higher on Wednesday, following a 50 basis point reduction in the U.S. Federal Reserve’s benchmark rate, bringing it to 5%.

This increase in the Mexican market, contrasting with declines on Wall Street, is attributed to the opportunity created by the 50 basis point gap between interest rates in the U.S. and Mexico. This mechanical reaction is largely based on the interest rate differential compared to leading rates, such as Japan’s, influencing carry trades. Consequently, investors are attracted to assets in currencies with higher rates compared to leading ones.

Additionally, the FTSE BIVA, Mexico’s second stock index, rose from 1,085.31 points yesterday to 1,090.97 points today, reflecting a 0.52% increase.

The top gainers at the close of the session were Televisa (+7.37%), Banco del Bajío (+3.08%), Banregio (+2.06%), Alfa (+1.91%), and Grupo Aeroportuario del Pacífico (+1.77%). The biggest decliners were Genomma Lab (-1.47%), Walmart de México (-1.40%), Inbursa (-1.33%), Pinfra (-0.82%), and LaComer (-0.67%).

It’s important to note that the U.S. had experienced five consecutive days of gains. The full impact of this announcement on the Mexican markets will become clearer over the next week or two, as we can expect considerable volatility.