The Day at a Glance | June 5 2024

The Top

• Producer prices in the Eurozone remain in deflation territory.

• U.S. private payrolls increased by 182,000 jobs in May, below the consensus forecast (175,000) and the previous month (188,000), according to the ADP employment report. This suggests there will be a weak non-farm payroll figure on Friday.

• Eurozone PMI´s indicate that the block’s economy grew at its fastest pace in a year as inflation eases.

• According to a Reuters poll, the U.S. Fed will cut the federal funds rate in September and once more this year, although there is a significant risk that they might opt for only one or no cuts at all.

• In Mexico, consumer confidence stood at 46.7 points in May 2024, marking a monthly 0.5 points decrease. 

• Oil prices are near four-month lows due to an expected supply increase later in the year once OPEC+ starts to undo some production cuts.

Economic Environment

Producer prices in the Eurozone remain in deflation territory. In April, Eurozone producer prices fell by 1.0% m/m, marking six consecutive months of declines. On an annual basis, producer prices in April fell by -5.7%, setting below the market expectation of a -5.3% figure. In their main categories, deflation was recorded in energy (-14.7% y/y) and intermediate goods (-3.9% y/y), while capital goods (1.5%), durable consumer goods (1.0%), and non-durable consumer goods (0.9%) increased. Excluding energy-related goods, producer prices logged 0.2% month-on-month and -1.0% year-on-year figures. The block´s main economiesremained in deflation territory on an annual comparison in April: Germany at -3.2% (prev. -2.9%), Spain at -6.6% (prev. -8.2%), France at -6.8% (prev. -8.3%), and Italy at -8.1% (prev. -12.7%). April´s producer price figures suggest that cost pressure on consumer prices remains practically null. This would back a scenario of interest rate cuts; however, wage cost pressures remain as the main challenge for the European Central Bank. A 25 basis point cut in the ECB’s benchmark rates is expected tomorrow.

Markets and Companies

Weak labor market data gave investors hope that the Fed might cut interest rates this year. The market will also be monitoring service and non-manufacturing purchase data to be released today. After that, attention will focus on weekly unemployment claims numbers on Thursday and May´s important employment report on Friday. In Europe, markets are up as investors await the ECB´s meeting. The Stoxx 600 was up 1% at 2:05 p.m. London time, with most sectors in the green. Tech stocks led gains (+2.9%) while mining stocks were down -0.3%. In Asia, Japan’s Nikkei fell -0.89% and Hong Kong’s Hang Seng was down -0.06%. Regardingcommodities, oil prices are rising but remain near a four-month low due to an expected increase in supply later this year as OPEC+ starts to unwind some production cuts. Metals and cryptocurrencies are up, and in Mexico, the IPC is down (-0.28%), and stands at 53,338 points.

After yesterday´s trading session, the exchange rate fluctuated between a low of 17.61 and a high of 17.80, currently trading at 17.61.

Corporate News

Corporate News

• CrowdStrike shares soared 10% after the cyber securityfirm posted better-than-expected results and a strong guidance.

• Hewlett Packard Enterprise rose 15% after reporting stronger-than-expected results.