The Day at a Glance | October 9 2024

The Top

• In Mexico, general inflation for September set in line with our estimate and slightly below the consensus forecast.

• The national producer price index, excluding oil and services, stood at 5.5% year-on-year in September, up from 5.0% year-on-year recorded a month earlier, revealing that cost pressures are increasing.

• Today, the Federal Reserve’s latest meeting minutes(from the announcement made on September 18^th)will be published, when the federal funds rate range was cut by 50 basis points.

• Germany´s economy is expected to contract by -0.2% in 2024, according to estimates from the Ministry of Economy.

• Oil prices erased initial gains on Wednesday due to weak demand fundamentals and rising supply counteracting the heightened risk of supply disruptions from the conflict in the Middle East and Hurricane Milton in the U.S.

Economic Environment

September´s general inflation set in line with our estimate and slightly below the consensus forecast. INEGI reported that the Consumer Price Index for September recorded a 0.05% monthly change, in line with our estimate (0.05%) and below the market consensus forecast (0.09%). Year-on-year, general inflation for September was 4.58%. Meanwhile, core inflation, which excludes the most volatile items such as energy and agricultural products, and government tariffs, increased by 0.28% month-on-month in September, slightly below our estimate (0.30%) and the consensus forecast (0.31%). Year-on-year, core inflation stood at 3.91% in September. By components, goods increased by 0.21% month-on-month and 2.92% year-on-year, while services rose by 0.35% month-on-month and 5.10% year-on-year. On the other hand, non-core inflation decreased by -0.72% month-on-month and increased by 6.50% year-on-year. Overall, inflation figures were positive, as general inflation continues to decline, especially since the core component is now around 10 basis points below 4.0%. However, a greater decline in the coming months is expected to be challenging, as the services component remains very high.

Markets and Companies

Major US indices are recording mixed figures on Wednesday following a winning session. Wall Street comes off a solid session driven by gains in the technology sector and declining oil prices. These gains appeared to reflect growing optimism that the Federal Reserve can manage a soft landing, especially after last week’s employment report showed continued strength in the labor market. In Europe, markets traded slightly higher on Wednesday. The Stoxx 600 was up 0.25% at noon, with only the banking and oil and gas sectors in negative territory. However, the subdued session comes after an unstable start to the week for regional markets, with investors reacting to a slowdown in the stimulus rebound in China. In Asia, the CSI 300 index fell 7.05%, snapping a 10-day winning streak and closing at 3,955.98, while Hong Kong’s Hang Seng index tumbled 1.7% in its final trading hour during a volatile session. As for commodities, oil prices plunged more than 4% in the previous session amidst a possible ceasefire between Hezbollah and Israel, but markets remain cautious about a potential Israeli attack on Iran’s oil infrastructure. Metals and cryptocurrencies are down. In Mexico, the IPC is up 0.06% and stands at 51,798 points. 

The exchange rate stands at 19.37. 

Alfa called for an extraordinary shareholders’ meeting on October 24 to propose the spin-off of Alpek. Once this spin-off is completed, Alfa would become Sigma, the food company. The company expects to finalize the spin-off process in 2025.

Regarding the COFECE investigation into Walmex, Ignacio Caride, the company’s Chief Executive Officer and General Director, said yesterday that an unfavorable resolution could force the company to adjust its operations, but it would not affect the announced investments.

Corporate News

• Boeing shares fell 1.8% after the company withdrew a pay raise offer it had made to 33,000 machinists on strike since mid-September.

• Reddit shares rose more than 2% after Jefferies initiated research coverage with a buy rating.