The Day at a Glance | October 3 2024

The Top

• Producer prices in the Eurozone remain in deflationary territory.

• The backlog of container ships is growing at US ports as the largest port workers’ strike in half a century enters its third day, preventing the unloading of goods and threatening shortages of all types of products.

• In the week ending September 28^th, initial unemployment insurance claims in the US stood at 225,000 (220,000 expected), marking a moderate increase of 6,000 compared to the previous week’s 219,000.

• Final PMI´s from the Eurozone showed that business activity fell back into contraction last month, although the slowdown was not as sharp as initially thought.

• Bank of England Governor Andrew Bailey said the central bank could take more aggressive steps to cut interest rates if inflationary pressures continue to ease, though the conflict in the Middle East could push oil prices higher.

• Oil prices rose on Thursday as investors worried that a widening conflict in the Middle East could disrupt crude oil flows from the region, though stronger global supply prospects kept gains limited.

Economic Environment

Producer prices in the Eurozone remain in deflationary territory. In August 2024, Eurozone producer prices increased by 0.6% m/m, marking three consecutive months of growth. However, on an annual basis, producer prices fell by -2.3% in August, slightly above the consensus estimate of -2.4%. By major categories, there was deflation in energy (-7.7% y/y) and intermediate goods (-0.8% y/y), while capital goods (1.5%), durable consumer goods (0.3%), and non-durable consumer goods (1.1%) all increased. Excluding energy-related goods, producer prices were stagnant on a monthly basis and logged slight annual growth (0.3%). The block´s main economies remained in deflation on an annual basis during August: Germany at -1.1% (prev. -1.1%), Spain at -1.3% (prev. -1.6%), France at -6.3% (prev. -5.7%), and Italy at -1.1% (prev. -1.6%). August’s producer price figures suggest that cost pressures on consumer prices are beginning to rise on the margin, though on an annual basis, they remain negative. Coupled with last week’s consumer price data, it is likely that the European Central Bank will cut interest rates again on October 17^th. 

Markets and Companies

In the US, markets opened with slight losses as investors await September´s job report. Weekly unemployment claims slightly exceeded expectations, providing insights into the labor market situation ahead of Friday’s employment report. In Europe, stocks fell due to the escalating conflict in the Middle East, with the construction, mining, and automotive sectors leading the losses. In contrast, Japan led gains in Asia, with the Nikkei 225 rising, while in Hong Kong, the Hang Seng index broke its six-day winning streak. Additionally, new fiscal support measures from Beijing are expected in the coming months.

In the commodities market, crude oil prices recovered, accumulating a near 5% increase, driven by fears that Israel may retaliate against Iran, potentially disrupting oil supply. Meanwhile, gold prices fell on Thursday, setting at USD $2,646.65 per ounce, with other metals also posting declines.

In fixed income, US Treasury yields are rising, with the 10-year yield at 3.81% and the 2-year yield at 3.67%.

Locally, the IPC is trading at 52,157.5 points.

The exchange rate stands at 19.52 after closing at 19.42 yesterday.

Gentera announced new changes in its organizational structure. Omar Sahid Romero Bejarano will take over as Deputy General Director of Banco Compartamos, YeromCastro Fritz as Executive Director of Operations, and RaúlTenorio Núñez as Director of Yastás.

Grupo Aeroportuario del Pacífico reported a 3.9% decrease in passenger traffic in September compared to the same month in 2023. The Guadalajara airport saw a 4.1% increase in traffic, while Los Cabos, Tijuana, and Puerto Vallarta experienced declines of 9.9%, 6.2%, and 5.1%, respectively. Montego Bay in Jamaica saw an 11.5% drop. Despite the decrease in available seats, the load factor rose to 81.0%.

Genomma Lab Internacional announced that its subsidiary, Medicinas y Medicamentos Nacionales, has received Good Manufacturing Practices (GMP) certifications from COFEPRIS for its production lines of topical liquids, oral liquids, and tablet coating at its Toluca plant.

Corporate News

• Nvidia’s CEO, Jen-Hsun Huang said there´s “incredible demand” for its new Blackwell processor, pushing the company’s shares higher at market open. 

• Shares of the automaker Stellantis fell after a downgrade from Barclays, citing inventory issues in the US and loss of market share.

• OpenAI closed a USD $6.6 billion funding round, with investors including Thrive Capital, Microsoft, Nvidia, and SoftBank. This round values the company at USD $157 billion.