The Day at a Glance | April 11 2024

The Top

*In Mexico, industrial production logged resilience in February 2024. 

*Annual consumer inflation in China stood at 0.1% in March 2024, below the market´s forecast of 0.4%. 

*The European Central Bank kept its interest rates unchanged in its April meeting, while modifying its forward guidance, reinforcing the idea of a possible cut in June. 

*Producer prices in the U.S. increased by 0.2% m/m in March 2024, marking the smallest increase in three months, following a 0.6% increase in February (0.3%e). 

*Biden will warn about Beijing’s actions in the South China Sea at the Philippines-Japan summit. 

*U.S. stock indices are trading with mixed movements, following yesterday’s declines. 

Economic environment

In Mexico, industrial production logged resilience in February 2024. February´s figures recorded an annual 3.3% growth in the country’s industrial activity, according to original figures. This result was positively surprising as it exceeded the 2.8% y/y anticipated by market analysts after starting the year on the right foot with a revised growth of 2.7%. Internally, three out of four components recorded annual growth, with construction being the most significant, increasing by 10.4%. Additionally, manufacturing industries, and water, gas, and electricity generation and distribution logged a 2.3% increase. On the hand, mining decreased by -0.9% y/y. On a monthly basis, industrial production in Mexico decreased by -0.1% in February, below consensus estimates which were expecting a 0.3% rate of growth. Overall, February´s figures generate optimism that Mexico’s economic activity remains resilient; however, the month-to-month decline suggests there was a slowdown in the pace of growth. 

Annual consumer inflation in China stood at 0.1% in March 2024, below market expectations of a 0.4% figure. By components, food prices decreased -2.7% y/y, more than the -0.9% y/y reported in February, reflecting a decrease in pork and vegetable prices, while non-food items increased by 0.7% y/y, below January’s 1.1% y/y. Meanwhile, core inflation hiked 0.6% y/y in March (1.2% prev.). The new data was well-received as it appears that the economy is leaving deflation territory, albeit at a slower pace than expected.

Markets and companies

U.S. stock indices are trading with mixed movements, following yesterday’s declines. Investors are digesting inflation figures and their potential impact on the Federal Reserve’s upcoming monetary policy decisions. Yesterday’s consumer inflation data came in higher than expected, while today it was announced that producer inflation for March increased by 0.2%, below the expected 0.3%, although the core level set in line with expectations. Recently published inflation and employment figures have impacted expectations regarding the start of rate cuts by the Federal Reserve. After the data was released, the market is expecting two rate cuts by the end of the year. On the corporate front, investors are awaiting the release of financial sector company reports tomorrow, which is considered the start of the 1Q24 earnings season.

In Europe, stock markets are trading lower after learning that the European Central Bank kept its monetary policy unchanged. In Asia, markets recorded mixed figures. 

In the bond market, the yield on the 10-year Treasury bond is at 4.55%, while the 2-year bond is at 4.94%.

Regarding commodities, oil prices are down, with WTI at $85.47 per barrel and Brent trading at $89.83 per barrel. Gold continues its upward trend, reaching a price of $2,345.9 per ounce.

In Mexico, the IPC is trading with a marginal increase, reaching 56,671.5 points.

The peso-to-dollar exchange rate is at 16.4361 after closing at 16.4417 yesterday. Overnight, the exchange rate reached a high of 16.4896 and a low of 16.3797.

This morning, Cemex announced that six new banks have joined the sustainability-linked syndicated credit agreement. The refinancing consists of a credit line of 450 million euros until 2029. Additionally, they added a new credit line of 300 million euros maturing in 2028. With this announcement, Cemex strengthens its liquidity while aligning with its Future in Action program.

The National Association of Supermarkets and Department Stores (ANTAD for its acronym in Spanish) reported its March sales figures. During March, nominal sales in same-store terms increased +7.9%. Regarding total store sales, which encompass both existing stores and those opened in the last 12 months, there was a growth of +10.9% compared to the same period of the previous year.

Corporate news

*CarMax shares were down nearly 9% after reporting quarterly results that set below expectations.

*Constellation Brands reported better than expected quarterly results, with strong momentum in its beer business.