The Day at a Glance | May 29 2024

The Top

• The IMF increased China’s GDP growth forecasts for 2024 and 2025 but warns of future risks.

• Inflation in Germany increased by 2.8% in May, slightly above expectations, indicating that price pressures remain present in the European block´s largest economy. 

• According to a Reuter’s survey, an ECB interest rate cut on June 6^th seems certain, with most economists surveyed anticipating two additional cuts in September and December.

• The Bank of Japan may raise interest rates if sharp declines in the yen drive inflation or if public perception of future prices changes more than expected, said board member Seiji Adachi on Wednesday.

• Oil prices rise on expectations that OPEC+ will extend production cuts.

• The Dow Jones is down due to a drop in artificial intelligence favorite Nvidia. 

Economic Environment

The IMF increased China’s GDP growth forecasts for 2024 and 2025 but warns of future risks. The IMF adjusted its growth expectations for China upwards after a strong first quarter, as the world’s second-largest economy grew by 5.3%. Consequently, the IMF revised its forecasts upwards for both 2024 and 2025, although they expect slower growth in the coming years. For 2024, the IMF expects economic activity in China to grow by 5.0% (previously 4.6%); while anticipating a slowdown in growth for 2025 (4.5% vs 4.1% prev.). Additionally, the IMF warned that growth in China could slow to 3.3% by 2029 due to its aging population and slower growth in productivity. The new forecasts from the global lender come as China intensifies its efforts to bolster an uneven economic recovery. Overall, the IMF’s improved forecasts for 2024 align with Beijing’s 5% growth target, yet deflationary pressures remain significant and a prolonged real estate crisis continues to be a substantial drag on growth.

Markets and Companies

The Dow Jones is down due to a drop in artificial intelligence favorite Nvidia. Nvidia shares are down this morning, marking what would be its first bad day since the company posted extraordinary results last week. During the three sessions following the report’s release, Nvidia surged approximately 20%. Meanwhile, the yield on the U.S. 10-year Treasury bond rose for a second day, and currently stands at 4.59%. In Europe, markets extended losses on Wednesday following their worst session of the month. The Stoxx 600 was down 1% at 1:58 p.m. London time, with oil and gas stocks falling and taking all sectors into the red, while mining stocks led losses with a 2% drop. Meanwhile, Asia-Pacific markets traded mostly lower as investors assessed Australia’s April inflation figures and consumer confidence data from Japan. Regarding commodities, oil prices are rising as major producers are expected to maintain production cuts. Metals and cryptocurrencies are down, and in Mexico, the IPC is down -0.28% and stands at 55,029 points.

After yesterday’s market close, the exchange rate fluctuatedbetween a minimum of 16.72 and a maximum of 16.91, currently trading at 16.91.

Corporate News

• Dick’s Sporting Goods shares rose 7.7% after reporting earnings and revenues above expectations. The company also raised its full-year outlook.

• American Airlines fell 8% after the company cut its outlook for the second quarter and announced the departure of its chief commercial officer.