The Day at a Glance | February 24 2025

The Top

• In Mexico, inflation in the first half of February rebounded mainly due to base effects.

• On Monday, Germany’s conservatives, led by Friedrich Merz, vowed to form a government quickly after winning the national elections. However, they face complex negotiations to build a coalition.

• Business confidence in Germany unexpectedly stagnated in February, according to a survey published Monday, posing a challenge for the incoming government, which has pledged to revive Europe’s largest economy from its prolonged slowdown.

• European Central Bank policymaker Pierre Wunschwarned that the Eurozone risks “blindly” moving toward excessive interest rate cuts and should be prepared to halt them soon, the Financial Times reported Monday.

• Ukraine entered its fourth year of full-scale war with Russia on Monday, hosting several European and global leaders at a summit, yet facing uncertainty over whether it can still rely on its strongest ally, the United States.

• Oil prices remained unchanged on Monday as investors awaited more clarity on negotiations to end the war in Ukraine and assessed the potential resumption of crude exports from northern Iraq.

Economic Environment

In Mexico, inflation in the first half of February rebounded mainly due to base effects. INEGI reported that the National Consumer Price Index rose 0.15% in the first half of February, nearly in line with our 0.14% estimate and below the 0.17% consensus forecast. Annual inflation for the period stood at 3.74%, up from 3.48% in late January. The main contributors to the increase were eggs, dining establishments (such as small eateries and taco shops), and housing costs. Core inflation, which excludes volatile items like energy and agricultural goods, rose 0.27%—in line with our forecast and slightly above the 0.25% consensusestimate. Annual core inflation reached 3.63%. By category, goods logged a 2.74% y/y increase, while services rose 4.62% y/y. Overall, inflation rose mainly due to base effects, as early February last year recorded an unusually low reading. However, core inflation remains close to its 2003–2019 average of 3.65%, backing expectations of a 50-basis-point cut in the benchmark interest rate.

Markets and Companies

US futures rise after last week’s Wall Street decline; the Dow lost 2.51%, its worst performance since October, while the S&P 500 and Nasdaq fell 1.66% and 2.51%, respectively.

In Europe, markets are mixed following Germany’s elections; the CDU/CSU secured the most votes, and its candidate, Friedrich Merz, is set to succeed Olaf Scholz as chancellor.

In Asia-Pacific markets, most indices fell after Wall Street’s worst session of the year on Friday, impacted by economic slowdown data and higher inflation in the US.

Regarding commodities, oil continues to decline as investors await progress in negotiations on the Ukraine war and a potential resumption of exports from northern Iraq.

Gold remains near its record high, backed by a weaker dollar, as the market awaits a key US inflation report.

In Mexico, IPC futures are trending higher (0.54%).

Over the weekend, the exchange rate fluctuated between a low of 20.32 and a high of 20.44. It´s currently at 20.45. 

Volaris released its 4Q24 results, reporting a 7.1% y/y decline in operating revenue, while EBITDAR increased 17.8% y/y, improving the EBITDAR margin by 8.4 pp, slightly above its 3Q24 guidance.

Corporate News

• Palantir Technologies’ stock fell more than 3%, extending last week’s 14.9% drop, its worst weekly decline since January. The drop is attributed to potential sell-offs by retail investors.

• Alibaba fell 3% after last week’s strong 15% rally driven by solid earnings. This came despite Morgan Stanley upgrading its rating to “overweight,” highlighting its leadership in AI cloud computing.