(Bloomberg) -- Mexican stocks rose by the most in more than two months on Tuesday as pledges by U.S. lawmakers to swiftly approve a new trade deal between the U.S., Mexico and Canada eased uncertainty over the future of U.S.-Mexico trade.
The benchmark S&P/BMV IPC stock index jumped as much as 1.6% in its biggest intraday gain since Oct. 4. The Mexbol index closed at its lowest since early September last Friday, hurt by worries that the approval of the new trade deal could drag through next year, said Juan Rich, head of analysis at Mexican brokerage Ve Por Mas.
Officials from the U.S., Mexico and Canada were set to sign a new trade deal in Mexico City on Tuesday and Democrat lawmakers said they would vote to pass the accord. “This reduces the uncertainty that had been weighing on stock prices,” Rich said.
Mexican stocks had been repeatedly battered since U.S. President Donald Trump took office with threats to rip up a free trade deal with Mexico. Mexico sends about four-fifths of its exports to the U.S., but few companies on the country’s benchmark index are directly linked to trade. Still, the economy could benefit from greater investor confidence under the new trade deal.
Billionaire Carlos Slim’s conglomerate Grupo Carso led gains on the index, rising as much as 7% to about a five-month high. Stock exchange Bolsa Mexicana de Valores rose as much as 4.6%, heading back toward a record high the stock hit last month.
Among Mexican companies with direct exposure to manufacturing that are not on the IPC, industrial real estate group Terrafina rose as much as 4.3%, while autoparts maker Nemak gave up early gains to trade little changed even as volume surged to the highest since April.
Rich said stocks could still see limited gains before year end, but added that analysts are dialing back estimates for 2020 growth after the economy flatlined in 2019, hurt by uncertainty about domestic policy under President Andres Manuel Lopez Obrador. Signs of a revival in construction spending will be needed to ease concerns about growth, he said.