The Day at a Glance | February 29 2024

The Top

*In its Quarterly Inflation Report, the Central Bank of Mexico estimates 2.8% growth in GDP for 2024.

*The unemployment rate in Mexico set at 2.9% in January 2024, down from the 3.0% observed in the same month of the previous year.

*PCE inflation slowed down from 2.6% in December 2023 to 2.4% in January 2024, in line with estimates.

*The U.S. Congress makes a last-minute attempt to avoid a government shutdown.

*Initial unemployment claims in the U.S. increased to 215 thousand during the week ending on February 24th (previous: 202 thousand).

*Inflation in Germany dropped to 2.7% in February.

*Markets mixed ahead of the release of inflationary data in the U.S.

Economic environment

In its Quarterly Inflation Report, the Central Bank of Mexico estimates 2.8% growth in GDP for 2024. As for 2025, the estimate is 1.5%. Banxico notes that the downward revision in growth estimates for 2024 is explained by a greater than expected slowdown in 4Q23, which induces an arithmetic effect of a lower growth base for 2024. Forecasts for inflation recorded upward adjustments, both for overall and core inflation for all quarters of 2024, given the spike in inflation during the last quarter of 2023, which had already been announced in the monetary policy announcement on February 8th. Additionally, in a press conference, deputy governors revealed their monetary policy stances. In our opinion, the preference of the Governing Board´s members to start cutting rates as early as March is not as clear as possibly suggested by the market and minutes. In our opinion, Banxico should adjust rates in the May meeting if data reveals that inflation has returned to a sustained downward trend, especially because the balance of risks remains skewed to the upside, and represents an uncertain outlook for the disinflationary path.

Markets and companies

Global markets are mixed. This morning, stock futures were falling ahead of the inflation report. The Personal Consumption Expenditures Price Index was presented as investors looked for any signs of cooling prices that could result in more flexible monetary policy. Dow Jones futures were down around -0.18% ahead of the report and market opening, while S&P 500 futures decreased by -0.06%, and Nasdaq futures by -0.02%. In Europe, markets were slightly higher before key inflation reports in the U.S. and Europe. The Stoxx 600 index rose +0.15% in the morning, continuing the week’s moderate movements, with mixed sectors. Construction stocks gained +1.5%, and technology stocks fell -0.5%. In Asia, markets closed with mixed figures as investors also sought clues about the Fed’s interest rate path. Hong Kong’s Hang Seng index added +0.5% and seemed to be on track to end the day with gains, while China’s CSI 300 closed +1.9% higher. In Mexico, IPC futures are slightly higher (+0.33%), standing at 55,532 points. Regarding commodities, crude oil futures are on track to record their second consecutive monthly gain as OPEC+ is expected to extend production cuts at least until the second quarter. Currently, WTI and Brent contracts are at $78.60 and $83.55 per barrel, respectively. Meanwhile, metals are slightly higher: gold +0.2%, silver +0.3%, and copper +0.1%. Lastly, cryptocurrencies are recording significant positive movements. Bitcoin is up +4.10% and reached $64,000 for the first time since November 2021.

After yesterday’s trading session, the exchange rate fluctuated between a minimum of 17.06 and a maximum of 17.10, currently trading at 17.08

Corporate news

*Shares of Snowflake, a cloud data company, sank after presenting disappointing product revenue guidance for the first quarter and announcing the CEO’s retirement.

*C3.ai’s stock, an artificial intelligence software company, popped more than 15% on robust quarterly earnings.

*Okta’s stock, an identity management company, surged more than 25% due to a stronger-than-expected quarter and outlook. Bank of America upgraded its recommendation to BUY.

*Duolingo’s shares rose 20% after the educational technology company reported fourth-quarter earnings and revenue that exceeded analysts’ expectations.

*AMC Entertainment’s shares fell more than 10%. The movie theater stock topped Wall Street revenue estimates but posted a bigger-than-expected loss of 83 cents per share.