The Day at a Glance | March 6 2025

The Top

• The European Central Bank (ECB) cut interest rates and may continue doing so in 2025.

• Eurozone retail sales slowed in January.

• U.S. President Donald Trump will temporarily exempt automakers from his 25% tariff on Canada and Mexico for one month, provided they comply with the current USMCA rules, the White House announced on Wednesday.

• The U.S. President is intensifying his campaign against China’s exports—the economic pillar of his main strategic rival—by threatening secondary sanctions on third countries. This move marks a step toward a greater separation between U.S.-centered supply chains and those of the rest of the world.

• In the week ending March 1^st, 2025, U.S. initial jobless claims stood at 221,000 (235,000 expected), down from 242,000 in the previous week.

• Chinese Premier Li Qiang’s renewed focus on boosting consumption is not being supported by sufficient stimulus measures, economists warn. They note that the trade war with Washington and other domestic challenges will likely keep policymakers engaged in a prolonged fight against deflation.

• Oil prices rose on Thursday, recovering slightly from a multi-year low, though Brent remained below $70, pressured by trade tariffs between the U.S., Canada, Mexico, and China, as well as OPEC+ plans to increase production.

Economic Environment

The European Central Bank (ECB) cut interest rates and may continue doing so in 2025. The ECB lowered its three key rates—deposit, refinancing, and lending—by 25 basis points to 2.5%, 2.65%, and 2.9%, respectively. This marks the sixth rate cut since June, with the ECB leaving the door open for further reductions, though it did not guarantee another in April. The decision signals slowing inflation and growth, though monetary policy remains restrictive. Additionally, the ECB revised its inflation forecasts, now expecting 2.3% in 2024, down from the previous 2.4% estimate. However, fiscal and trade uncertainty—including the potential for a trade war with the U.S.—has increased medium-term inflation risks. Regarding economic growth, the ECB lowered its 2025 forecast to 0.9%, just above the 0.7% recorded in 2024, due to weaker investment and exports affected by global uncertainty. Despite these risks, the ECB still anticipates at least two more rate cuts this year, with markets aligned with this outlook. However, rising defense and infrastructure spending could alter the inflation landscape moving forward.

Eurozone retail sales slowed in January. In the first month of 2025, retail sales rose 1.5% y/y (1.9% expected), following a 2.2% y/y increase in December, marking seven consecutive months of annual growth. Within retail sales, food sales increased by 1.4% y/y (prev. 0.8%), while non-food stores rose 1.8% y/y (prev. 3.6%), and gas stations logged a slight 0.1% uptick (prev. -0.4%). Among the Eurozone’s major economies, sales in France rose 0.7% y/y (prev. 1.5%), while Germany logged a 2.7% y/y increase (prev. 2.8%). On a monthly basis, retail sales fell by -0.3%, surprising analysts who had expected a slight 0.1% increase. Overall, consumption continues to show signs of weakness, reinforcing expectations for further ECB rate cuts in the coming months.

Markets and Companies

Futures for major U.S. indices were trading lower this morning as uncertainty persisted over new U.S. tariff measures. Canada and China have retaliated, although the White House decided to postpone tariffs on certain automobiles that comply with the USMCA for one month. In Europe, markets were mostly down following the European Central Bank’s 25-basis-point rate cut, in line with expectations. In Asia, equities closed higher amidstexpectations of additional stimulus in Japan and China’s announcement to increase its fiscal deficit.

In the commodities market, oil prices were rebounding but remained under pressure from OPEC+ production increases and trade tensions between the U.S., Canada, and Mexico. Meanwhile, gold fell to $2,903 per ounce.

In fixed income, the yield on the 10-year U.S. Treasury note rose to 4.29%, while the 2-year yield stood at 3.97%, as markets remained focused on the potential direction of U.S. interest rates.

In the Mexican market, IPC futures were trading higher at 52,950 points. Meanwhile, the exchange rate stood at 20.36, after reaching 20.40 in the previous session.

Grupo Aeroportuario del Sureste released its monthly passenger traffic report, showing growth in Puerto Rico (+8.6%) and Colombia (+3.3%), while traffic in Mexico declined 7.5% in February. Notably, Cancun logged declines in both domestic (-3.6%) and international (-11%) traffic.

Corporate News

• Software company MongoDB issued fiscal 2026 guidance below market expectations. Despite reporting a strong quarter with revenue of $1.43 billion (+23% y/y), its weak outlook raised concerns about future demand for its database platform.

• Semiconductor developer Marvell Technologies slightly exceeded expectations with revenue of $1.82 billion; however, its weak guidance weighed on market sentiment. Optimism about a potential acceleration in semiconductor demand, particularly for AI, had driven expectations too high.

• Alibaba unveiled its QwQ-32B artificial intelligence model, claiming it can rival the DeepSeek-R1 model.