The Day at a Glance | June 13 2024

The Top

• In the United States, May´s annual producer inflation set below consensus expectations.

• Industrial production in the Eurozone fell slightly in April.

• The Ministry of Finance reduced the country’s external debt maturing in 2025 by $894 million through an early maturity process of a bond due in April next year.

• China urged the European Union to reverse “bad practices” regarding tariffs imposed on Chinese electric vehicles up to 38.1%.

• Oil prices fell on Thursday as investors digest the possibility that the Fed may only cut rates once before the end of the year, while abundant crude and fuel inventories in the US also weigh on the market.

• The S&P 500 reacted positively to US inflation data.

Economic Environment

In the United States, May´s annual producer inflation setbelow consensus expectations. In May, the producer price index fell -0.2% m/m, falling short of the market’s expectation of a 0.1% increase, after growing 0.5% in April, according to seasonally adjusted figures. Reviewing theindex´s main components, we find that May’s figure is explained by stagnation in services and a -0.8% decline in demand for goods. On an annual basis, producer inflation was 2.2% in May (prev. 2.3%), below the consensus estimate of 2.6%, according to unadjusted figures. Meanwhile, core producer inflation, which excludes food and energy prices, recorded a 2.3% annual change (prev. 2.4%). Yesterday´s producer and consumer price figures suggest that core PCE inflation will likely drop a bit in May.

Industrial production in the Eurozone fell slightly in April. Industrial production in the Eurozone decreased by -0.1% m/m in April, returning to contraction territory after recording 0.5% growth in March and 0.1% growth in February. April´s figure set below the consensus forecast, which had expected a 0.2% figure. This negative performance is mainly explained by a -0.4% drop in the intermediate goods component. On the other hand, energy production increased by 0.4%, capital goods by 0.7%, durable consumer goods by 0.3%, and non-durable consumer goods by 0.3%. On an annual basis, industrial production in the Eurozone fell by -3.0%, driven by contractions in 4 of its 5 components. The figures are disappointing, as the Eurozone´s fragile recovery was once again interrupted, posing a downside risk to growth in Q2 2024.

Markets and Companies

Global markets carry mixed sentiment. Major US indices closed mixed yesterday. Today, they are reacting to the Federal Reserve’s monetary policy decision and recent USinflation data. The Dow is down -0.47%, the S&P is up +0.19%, and the Nasdaq is up +0.75%. Meanwhile, the 10-year Treasury yield stands at 4.28%. In Europe, the Euro Stoxx index reacted to the latest US Federal Reserve monetary policy decision and US inflation data by falling -1.19%. All sectors in the red, with automobile stocks leading the losses, down -1.7%. In Asia, Japan’s Nikkei 225 reversed earlier gains and fell -0.4% to 38,720.47. China ended slightly lower at 3,028.9 (-0.28%). In Mexico, the IPC stands at 52,979.1 points. Oil prices have risen +3% this week, recovering from a sell-off due to OPEC+’s plan to increase production in the fourth quarter. Today, the price is at $78.55 per barrel. Meanwhile, gold fell -0.5% to $2,314 per ounce. Silver is trading at $29.24 per ounce (-1.6%) and copper at $454.85 per pound (-0.2%). Lastly, cryptocurrencies are mixed.

After yesterday´s trading session, the exchange rate fluctuated between a low of 18.54 and a high of 18.92, currently trading at 18.54.

The National Association of Self-Service and Department Stores (ANTAD for its acronym in Spanish) reported May´s sales results. During May, same store sales recorded an 8.1%increase; total sales rose +11.1% compared to the same period of last year.

Corporate News

• Broadcom shares soared 13% after beating expectations on its quarterly results.

• Dave & Buster’s Entertainment fell around 7% after the company’s first-quarter revenues missed consensus estimates.

• Tesla jumped 7% after Elon Musk said his $56 billion pay package and a resolution to move the company’s incorporation to Texas were both about to be approved in a shareholder vote.