The Day at a Glance | June 19 2024

The Top

• Industrial production in the U.S. surprised in May by logging positive performance in the manufacturing sector.

• According to a Reuters survey, China is expected to keep its benchmark rates unchanged even though expectations of an interest rate cut increased after the release of weaker-than-expected economic data.

• Inflation in the U.K. returned to its 2% target for the first time in almost three years in May, but strong underlying price pressures virtually rule out the possibility of a cut before the elections.

• The Japanese yen´s weakness boosts exports, but the drop in volume highlights weakness in global demand.

• Russian President Vladimir Putin signed an agreement with North Korean leader Kim Jong Un on Wednesday, which includes a mutual defense commitment.

• Oil prices hit seven-week highs on Wednesday amidstgreater optimism for summer demand and concerns about an escalation in geopolitical conflicts.

• The S&P 500 reached an all-time high on Tuesday; Nvidia’s market cap surpassed Microsoft.

Economic Environment

Industrial production in the U.S. surprised in May by logging positive performance in the manufacturing sector. In the middle of the second quarter, industrial activity increased 0.9% month-on-month (m/m), exceeding expectations of a 0.4% increase and stagnation recorded in April. In a disaggregated manner, manufacturing rose 0.9% m/m, above expectations of a 0.3% m/m (-0.4% prev.)figure. Additionally, mining hiked 0.3% m/m, and utilities increased 1.6% m/m. The industry’s capacity utilization stood at 78.7% in May, 0.9 percentage points below its long-term average (1972-2023), suggesting few inflationary pressures regarding costs. On an annual basis, U.S. industrial production rose 0.4% in May 2024, returning to positive territory after recording a -0.7% year-on-year decline in April and a -0.2% y/y decrease in March. By components, manufacturing increased 0.1% y/y, and utilities rose 3.9% y/y, while mining decreased 0.4%. Overall, May´s figures show that industrial production increased more than expected in May due to the positive performance in manufacturing. However, looking ahead, the momentum is unlikely to be sustained due to the expectation that the federal funds rate will remain high for longer than anticipated – along with a slowdown in consumption.

Markets and Companies

The S&P 500 reached an all-time high on Tuesday; Nvidia’s market cap surpassed Microsoft. Yesterday, the S&P 500 was up 0.3% and closed at 5,487 points, marking a new all-time high; the Nasdaq index also reached a new record level. Today, U.S. markets are closed for “Juneteenth.” In Europe, markets are logging mixed figures; the Stoxx 600 remained relatively stable (-0.05%) at 2:00 p.m. London time. Tech stocks led the losses, falling -0.81%, while mining stocks rose +0.88%. In Asia, Hong Kong markets were up more than 2% on Wednesday, driven by energy and basic materials stocks. Regarding commodities, oil remains steady as its prices remain close to its highest levels in seven weeks, despite an increase in U.S. inventories. Metals and cryptocurrencies are up. In Mexico, the IPC is stable (+0.01%) and stands at 53,242 points. 

After yesterday’s trading session, the exchange rate fluctuated between a low of 18.34 and a high of 18.47, currently trading at 18.45.

Corporate News

• Shares of La-Z-Boy rose more than 19% after the furniture company exceeded Wall Street expectations.

• Rocket Lab USA shares jumped around 13% after the company signed a 10-launch deal with Japanese company Synspective. The new launches are scheduled to take place between 2025 and 2027.