Question

Give an example from the news media that shows how sentiment might have influenced the Mexican market.

Answer 1

Reference: Article dated 28 August 2018 “ 4 top winners from US-Mexico Trade deal”

The US Mexico Trade deal resulted in the surge in US stocks, global currencies, and commodities. The investors were happy with the US-Mexico trade deal ahead of NAFTA. The stock market touched six months high. This was primarily due to the fear of global trade war receding. The US automakers and parts manufacturers recorded higher gains as the agreement gives American plants an upper hand compared to Mexican plants where the workers earn much less.

The key points of the deal included the following:

• 75% of parts used in the cars have to be sourced from US or Mexico
• The deal requires 40 to 45% of the parts to be manufactured by workers earning $ 16 per hour
• The agreement is for 16 years and will be reviewed every 6 years.

The result was that S&P 500 and Nasdaq closed at an all-time high for a straight second session on August 27, 2018. The Nasdaq traded above the 8000 marks. The auto and railroad stocks saw a surge.

The Mexican Peso and Mexican stock market showed a sudden jump. The Mexican Peso rose 1.2% against US dollar. The gains were later paired but were higher by .84% at 1950 GMT. The Mexican stocks rose by 1.63%