Mexican stocks sank on Friday after a record slump in US retail sales last month stoked worries of a deepening recession in the neighbouring United States, pushing cement maker Cemex to a 9-1/2 year low. The benchmark IPC stock index closed 0.75 percent lower at 19,562.14 points in a volatile session following a 4.8 percent surge on Thursday.
Retail sales in the United States dropped 2.8 percent in October, a US Commerce Department report showed on Friday, as consumers curbed their spending following steep losses in financial markets. It was the largest decline since the department's current methodology was adopted in 1992. Increasing signs of a deep US recession bode poorly for Mexico, which sends around 80 percent of its exports to its northern neighbour.
"There is a feeling of uncertainty with a negative bias that this recession could last many months, probably more than a year," said Carlos Ponce, head of analysis at Ixe brokerage in Mexico City. Economists are increasingly predicting that Mexico could fall into recession by the beginning of 2009.
The IPC is down nearly 34 percent this year, hit by worries about the credit crisis and a global slowdown. In debt trading, the yield on the government's benchmark 10-year peso bond fell 2 basis points to 9.70 percent after the security surged more than 70 basis points this week.
In the equities market, shares of America Movil Latin America's biggest cell phone operator, shed 4.2 percent to 20.09 pesos while its US shares gave up 5.7 percent to 30.76. Cemex the world's No 3 cement maker, fell 5.03 percent percent to 6.80 pesos, its lowest since March 1999.
The stock has been hammered this week on concerns that Cemex will struggle to refinance $6.6 billion of debt due by the end of 2009 amid tight global credit conditions and falling sales volumes in its key US and European markets. The company said on Friday it was in talks with five international banks to refinance a portion of its debt. Cemex shares on Wall Street lost 8.7 percent to $5.14. The peso firmed 1.34 percent at the central bank's final reference to 12.94 per dollar.