Global Financial Markets Rebound on Tuesday after Sharp Falls

By Elliot Bullman

Stock Market Seas are Calm, but the storm isn’t over

The main stock indices in the United States yesterday recorded a technical rebound, which showed the highest gain since the end of January 2016. Meanwhile the Mexican IPC fell by 3.36% during the morning of Tuesday, but later cut its losses and closed the session at 49,304.94 units, in a session marked by volatility.

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According to analysts, the falls were not due to economic problems in Mexico or the United States, but to a correction, after the positive streak last year.

After the plunge on Monday, the main stock indices in the United States recorded a technical rebound on Tuesday, supported by opportunity purchases, which in the end showed the highest gain since the end of January 2016.

After a session of ups and downs, the Dow Jones industrial average closed the session with a gain of 2.33 percent, while the S & P 500 and the Nasdaq rose 1.74 and 2.13 percent, respectively.

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Overnight, the Asian stock markets had a positive opening, in which the Nikkei index, of Japan, gained up to 3.20 percent, while Hang Seng, of China, rose 2.40 percent.

Alonso Cervera, chief economist for Latin America at Credit Suisse, said in an interview with El Financiero Bloomberg that the adjustment in the stock markets is not the beginning of a turning point that will cause greater alarms in the markets.

Carlos Ponce, Deputy General Manager of Bx + strategy, agreed that investors should not lose sight of the fundamentals and rather stick to what the economic data is reflecting, especially those of the United States.

Mexican Peso is Defensive

According to analysts, the monetary policy decision of the Bank of Mexico will be the main factor that investors will follow for the remainder of this week with the expectation is that it will raise interest rates by 25 basis points, although oil prices and the performance of the dollar will also be on the radar.

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If this currency expectation is fulfilled, although a large part is already discounted, the Mexican currency could register a slight appreciation temporarily. Therefore, during the week the Mexican peso could fluctuate between 18.50 and 19.02 pesos per dollar.

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