The Day at a Glance | July 5 2024

The Top

• A strong labor market in the US with signs of moderation.

• Retail sales in the Eurozone increased for a third consecutive month in May.

• US President Joe Biden will have a televised interview this Friday, amidst calls from some people in the Democratic Party for him to withdraw from the presidential race.

• The British Labour Party achieved a landslide victory in the parliamentary elections held this Thursday in the United Kingdom, and its leader, Keir Starmer, became Prime Minister.

• Hurricane Beryl, a category 2 storm, caused landfalls insome of Mexico’s major tourist destinations.

• Oil prices are heading for their fourth consecutive week of gains.

Economic Environment

A strong labor market in the US with signs of moderation. The Bureau of Labor Statistics (BLS) released employment data for June, which logged an increase of 206,000 jobs, slightly above the consensus expectation of 195,000 and below May´s 218,000 jobs. Job creation occurred in the government, health, social assistance, and construction sectors. Additionally, the BLS revised down job creation for April and May by 57,000 jobs. On the other hand, the unemployment rate set at 4.1% in June, after setting at 4.0% in May and 3.9% in April. Wage growth was 3.9% in June, the lowest since June 2021. This data is a good sign for the Federal Reserve as job growth is at a level that, according to various estimates, does not generate wage or inflationary pressures. Additionally, previous months were revised downward, unemployment rose, and wage growth moderated, which could back a possible cut in the federal funds rate by the end of the third quarter.

Retail sales in the Eurozone increased for a third consecutive month in May. In May, retail sales increased by 0.3% year-over-year, after an upward revision of 0.6% year-over-year the previous month. This marked the third consecutive month of moderate expansion. Internally, food sales increased by 0.3% year-over-year, while non-food product stores increased by 0.7% year-over-year, and gas stations decreased -0.6% year-over-year. On a monthly basis, retail sales returned to expansion territory with a marginal increase of 0.1%, following a -0.2% decline in the previous month. Overall, May´s data logged a modest rebound in consumption in the Eurozone halfway through the second quarter.

Markets and Companies

Main US stock indices are trading higher after June´semployment figures were released. Non-farm payrolls recorded a gain of 206,000 jobs, slightly above the 200,000 expected by consensus, while the unemployment rate edged up to 4.1%. Employment is important for gaining more clarity on the potential direction of Federal Reserve´smonetary policy. The stock market is heading towards a logging a positive week.  

In Asia, stock markets are logging mixed figures. In Japan, the Nikkei 225 index was down after hitting new highs, surpassing the 41,000-point level.

In Europe, markets are trading higher, reacting positively to the Labour Party’s majority win in the United Kingdom, which is likely to implement policies that would favor the housing segment.

In the debt market, the yield on the 10-year Treasury bond fell due to the increase in the US unemployment rate, backing the idea of at least one interest rate cut by the Fed this year.

In Mexico, the IPC is trading higher and stands at 52,665.7 points. The exchange rate of the peso against the dollar is 18.156.

Corporate News

• Macy’s shares rose after media reports indicated that a group of bidders had increased the purchase offer price for the company to $24.8 from the previous $24.

• Tesla shares have continued their recent rally, reacting to vehicle delivery figures that exceeded expectations.

• Companies linked to cryptocurrencies are recording a decline in their valuations, reacting to the drop in Bitcoin’s price, which is set at its lowest level since February.