Favorable results for the equity and fixed income markets during the period.

During May, the main stock indexes, the S&P 500 and NASDAQ, accumulated returns of 4.80% and 6.88%, respectively, thus continuing with the dynamism of the beginning of the year and recovering most of the losses suffered during the month of April. This rebound was attributed to favorable inflation readings as well as a positive day of corporate reports that concluded with annual earnings growth of 6%, exceeding expectations. The Communication Services and Technology sectors stand out in their accumulated performance, while Real Estate remains the only sector with negative performance so far this year.

On the other hand, the main fixed income indices were no exception, also presenting favorable results during the period that reduced the accumulated losses of the year. And although May was positive for these indices, it is the path of inflation that will dictate the behavior of fixed income going forward; for the moment, markets anticipate 1 or 2 rate cuts of 25 basis points by the FED towards the end of the year.

Turning to the local market, the Mexican stock market stood out for its poor performance at the end of May; the IPC fell 2.73% directly during the period, accumulating a negative performance of -3.85% during this 2024. Likewise, the negative results have continued during the first days of the month after the electoral results of June 2 were announced. Although the markets did not expect any surprises for the presidential race, neither did they anticipate a victory of such magnitude that included a qualified majority in the lower house and a few seats in the senate chamber. These results had a strong impact on the stock market in general, with financial, mining and airport companies being the most affected. On the other hand, the exchange rate went from ~17.00 pesos per dollar to 18.30, a depreciation of 7.6%. Finally, the Mexican government bond yield curve also came under pressure as the perception of country risk increased, until we know with greater certainty the direction and stance that the new administration will take. In view of the possible process of deinstitutionalization that is on the horizon, the markets remain one of the few counterweights to the majority power of the next six-year term.

Grupo Inversión recommends caution and will continue to assess political issues and their implications for the country's economy and markets.