The Day at a Glance | February 23 2024

The Top

*In Mexico, the value of construction grew by 36.2% in December.

*President of the United States Joe Biden announced new sanctions against Russia on Friday, marking two years since the start of the war in Ukraine. 

*Expectations for inflation in the Eurozone are increasing for the next year, according to the European Central Bank (ECB). 

*Despite support from authorities, new home prices in China continue to decline. 

*A former official from the Bank of Japan stated that the central bank could end negative interest rates in March if strong wage increases are observed. 

*The oil rally will come to an end after the Federal Reserve stated that it is not in a hurry to cut rates in the United States.

*Tech companies continue to boost momentum.

Economic environment

In Mexico, the value of construction grew by 36.2% in December, according to original figures. In December, the value of formal construction, excluding self-construction, grew by 1.0% on a monthly basis and adjusted for seasonality. By type of work, the greatest momentum was observed in works related to the public sector, specifically in Transportation and Oil, with monthly increases of 4.7% and 3.5%, respectively. By state, the highest participation in construction in December was in Quintana Roo with 11.7% and Nuevo León with 9.1%. According to original figures and on an annual basis, the value of construction grew by +130% for Transportation and Urbanization works, +64% in Electricity and Telecommunications, +37% in Irrigation and Sanitation, +24% in Building, and -10% in Oil in December.

Markets and companies

Today, futures of the main stock indices in the U.S. are operating with a positive bias, following yesterday’s boost in Nvidia’s shares due to a strong quarterly report and positive outlook for the company, which has benefited from developments in artificial intelligence. With this, the U.S. stock market is on track to close the week positively. On the other hand, the market continues to assess monetary policy prospects; yesterday, Christopher Waller, the Fed Governor, stated that the organization needs to carefully evaluate inflation developments before cutting interest rates. The market anticipates three interest rate cuts for this year, bringing the reference rate to a range of 4.50%-4.75%.

In Europe, markets were trading higher, with the Stoxx 600 reaching a new all-time high. In Asia, markets recorded gains, with the Chinese market accumulating 9 consecutive sessions in the green. Investors are evaluating the latest data on new home prices in China, which showed a 0.3% month-on-month decrease in January.

Regarding commodities, oil prices were showing declines, with WTI at 77.2 dpb, while Brent was trading at 82.3 dpb. Gold was making gains, reaching 2,026 USD/oz, potentially closing the week higher, and reacting to a weakening of the dollar against major currencies.

The yield on the ten-year Treasury bond set at 4.3%, showing a slight retreat as investors moderate expectations of interest rate cuts for this year. The IPyC futures were at 57,661.0, up 0.9%. The exchange rate is quoted at 17.08; it reached a maximum of 17.15 and a minimum of 17.08 earlier in the morning.

Femsa reported its quarterly results this morning. Revenues increased by +4.6% and were driven by growth in all business units, with notable growth in the Beverages business (Kof +8.1%) and Proximity Americas (+14.2%). It’s worth mentioning that, since divesting in Envoy Solutions, it no longer consolidates the results of Logistics and Distribution. Regarding profits, EBITDA advanced by +3.6%.

Oma reported solid quarterly results, although below our estimates. Aeronautical services revenues increased by 13.4%. National TUA revenues grew by 14.6%, and international TUA revenues grew by 9.1%. Non-aeronautical revenues advanced by 13.9%. The sum of aeronautical and non-aeronautical revenues grew by 13.5%. Adjusted EBITDA increased by 16.4%. The margin stood at 77.7%, 190 basis points higher compared to 4T22.

Corporate news

*Warner Bros. Discovery shares were declining before the opening as the company reported results below expectations in terms of revenue and profits, due to weaker performance in advertising revenue.

*Block’s shares reported better-than-expected results, and the company also revised upwards its EBITDA guidance for the year.

*Carvana’s shares were up nearly 33% before the opening after the company reported annual profits for the first time.

*Mercado Libre’s profits remained virtually at the same level as a year ago, and its shares were down 7% before the opening