The Day at a Glance | October 4 2024

The Top

• US employment surged sharply in September. 

• From January to September 2024, 1,079,413 vehicles were sold in Mexico (+10.53% y/y), 3,030,855 light vehicles were produced (+6.13% y/y), and 2,591,467 units were exported (+7.05% y/y). 

• The US port workers’ strike appears to have ended yesterday (Thursday) after an agreement was reached to increase wages by 62% over six years. 

• The European Union will proceed with heavy tariffs on electric vehicles made in China, even after Germany, the block’s largest economy, opposed them. 

• ECB official Mario Centeno said the European labor market is starting to cool, which is concerning as it could lead to below-normal investment and growth. 

• Oil prices rose sharply on Friday, heading for weekly gains of 10%, as investors weighed the prospect of a broader conflict in the Middle East after President Biden said the US was discussing an attack on Iranian oil facilities.

Economic Environment

US employment surged sharply in September. The Bureau of Labor Statistics (BLS) released employment data for September 2024, logging an increase of 254,000 jobs, far exceeding the consensus expectation of 140,000 and the 159,000 jobs reported in August. Additionally, the BLS revised job creation for July and August upwards by a total of 72,000 jobs for both months. Meanwhile, the unemployment rate fell to 4.1% in September, below the market consensus forecast and the 4.2% recorded in August. Annual wage growth in September was 4.0%, above the 3.9% recorded in August and beating the consensus forecast of 3.8%. Hurricane Francine, which hit Louisiana on September 11^th, did not appear to negatively impact employment data. Overall, September´s figures were strong, with robust job creation, lower unemployment, and a slight uptick in wages. However, for the Federal Reserve, this could complicate its efforts in a rate-cutting cycle, and for now, we can rule out additional 50-basis point cuts. 

Markets and Companies

The US stock market is up, with the Nasdaq leading gains after the employment report revealed the creation of 254,000 non-farm jobs, significantly surpassing Dow Jones’ expectation of 150,000. The unemployment rate stood at 4.1%, compared to the projected 4.2%, shifting investors’ focus toward the strength of the economy. This report reinforces the possibility of a “soft landing” for markets following a challenging start to October. Additionally, strikes on the east and gulf coasts of the US were temporarily resolved, improving market sentiment. In Europe, stock markets posted gains driven by the oil and gas, and automotive sectors, after the European Union implemented definitive tariffs on electric vehicles made in China. In Asia, the Hang Seng index reversed its previous losses, while markets in Australia and South Korea showed mixed performance.

Regarding commodities, US crude oil prices have risen nearly 9% this week. Despite the increase, oil prices are recovering from a low point after hitting their lowest level in almost three years due to weak demand in China and OPEC+ plans to increase production. Meanwhile, precious metals are down slightly. US Treasury yields for 2- and 10-year bonds stand at 3.85% and 3.95%, respectively.

The Mexican stock market is up, with the IPC trading at 51,806.0 points. After closing at 19.34 yesterday, the exchange rate currently stands at 19.16.

Volaris reported passenger traffic for September. The airline reduced its capacity by 12.8%, yet transported 2.3 million passengers with a load factor of 85%, up 1.2 percentage points from the previous year. Total RPMs fell by 11.5%, with domestic market RPMs down 18.5% and international RPMs increasing by 2.1%.

Corporate News

• Shares of the US airline Spirit Airlines dropped more than 38% after a report suggested the company is considering filing for bankruptcy. In this scenario, JetBlue is in talks for a merger with Spirit.

• Electric vehicle manufacturer Rivian lowered its annual production guidance due to supply chain issues; following the news, the company’s stock plummeted by 8%.

• Mining company Coeur Mining announced plans to acquire SilverCrest Metals in a deal valued at approximately USD $1.7 billion.