The Day at a Glance | October 18 2024

• China´s economy slowed in the third quarter of 2024. 

• Single-family home construction in the US increased in September, although the oversupply of new homes and potential buyers waiting for lower mortgage rates pose a short-term challenge. 

• According to ECB officials and new surveys, Eurozone inflation could decrease faster than expected, and economic growth is likely to remain weak, strengthening the case for a rapid pace of interest rate cuts in the coming months. 

• UK retail sales unexpectedly rose in September, according to official data released on Friday, contradicting signs that consumers were pessimistic about possible tax hikes ahead of the new government’s first budget later this month. 

• The Bank of Japan must focus on the economic impact of unstable markets and external risks, Governor Kazuo Ueda said on Friday, suggesting that the central bank is in no hurry to raise interest rates. 

• Oil futures decreased gradually and were on track for a weekly drop of more than 6% this Friday due to China’s economic slowdown and the reduced risk of supply disruption from the Middle East conflict.

Economic Environment

China´s economy slowed in the third quarter of 2024. The world’s second-largest economy grew by 4.6% y/y in 3Q24, following a 4.7% y/y growth in 2Q24 and 5.3% y/y in 1Q24. Third-quarter growth slightly exceeded the market consensus estimate of 4.5% y/y. For the first three quarters of the year, the economy grew by 4.8% y/y. By economic activity for the January-September period, agriculture grew by 3.7% y/y, industrial production by 5.8% y/y, and services by 4.7% y/y. In terms of demand, also for the first three quarters, retail sales rose by 3.3% y/y, gross fixed investment increased by 3.4% y/y and 7.7% y/y excluding the real estate sector, exports rebounded by 6.2% y/y, and imports rose by 4.1% y/y. Regarding the labor market, the urban unemployment rate stood at 5.1% in September, which was a -0.2 percentage points decrease compared to August. Household disposable income increased by 5.2% y/y in the January-September 2024 period. Overall, China’s economy expandedless than expected in the third quarter; however, it may rebound in the last quarter, especially considering the fiscal and monetary stimulus packages announced at the end of the third quarter.

Markets and Companies

The US stock market is heading for a positive weekly close, with the S&P 500 and Nasdaq on the rise. This momentum is largely driven by Netflix’s results, whose shares surged 7% after exceeding expectations in the third quarter, reporting a 35% increase in subscribers to its ad-supported plan. If this trend continues, it would mark the sixth consecutive week of gains for the three indices, the longest winning streak in 2024. European markets are up, boosted by sectors like mining and technology, following the European Central Bank’s decision to cut interest rates for the third time this year. In Asia, markets closed in positive territory; in China, GDP growth set at 4.6% year-on-year in the third quarter, which is slower progress compared to the previous quarter.

Regarding commodities, oil prices are heading for a weekly decline of 6%, the sharpest drop in over a month, amid concerns about demand in China and reduced supply risks from the Middle East. Meanwhile, gold has reached a new all-time high, surpassing $2,700 per ounce, driven by demand for safe-haven assets amidst geopolitical uncertainty.

US Treasury yields remain stable, with the 10-year bond at 4.07% and the 2-year bond at 3.95%, as investors digest strong US economic data and await upcoming comments from the Fed.

In Mexico, the IPC is trading higher at 52,496.5 points. The exchange rate stands at 19.70 pesos per dollar after closing at 19.85 yesterday. 

Quálitas reported its third-quarter results with a 23.9% increase in premiums issued, reaching 16,151 million pesos, driven mainly by the traditional segment and the fleet business. The insurer achieved a record 5.7 million insured units, logging 6.1% annual growth.

Kimberly Clark reported sales of 13.2 billion pesos in the third quarter of 2024, a 4% annual increase. Despite a 16% devaluation, the company managed to generate 400 million in cost savings. EBITDA increased by 1%, reaching 3.5 billion pesos with a 26.3% margin. 

Corporate News

• Shares of Procter & Gamble fell 0.8% after reporting lower-than-expected revenue due to weaker demand in China. 

• Despite exceeding earnings expectations, shares of American Express dropped 3.4% with slightly lower-than-estimated revenue. 

• In the tech sector, Apple shares increased 2% after Bloomberg reported that iPhone sales in China increased by 20% year-on-year in the first three weeks of sales.