The Day at a Glance | April 17 2024

The Top

*Jerome Powell, Chair of the Federal Reserve: “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence.”

*The President of the United States, Joe Biden, will call for greater tariffs on Chinese metal products in Pennsylvania on Wednesday.

*Eurozone inflation slowed across the board last month, reinforcing expectations of an interest rate cut by the European Central Bank in June.

*UK inflation came in above consensus forecasts, delaying expectations of rate cuts towards the end of the year.

*According to UK Foreign Secretary David Cameron, Israel has decided to retaliate against Iran’s attacks.

*Stocks in the US rise; the S&P aims to break its 3-day losing streak. 

Economic environment

Jerome Powell, Chair of the Federal Reserve: “”The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence”. In a speech made in Washington, the Fed Chair said that for now, given the strength of the labor market and progress on inflation, it is appropriate to allow the restrictive stance to remain in place for a longer period of time and to let data and the evolution of the economic environment guide them. Additionally, he emphasized that if high inflation persists, they can keep interest rates at current levels for longer than necessary. Powell’s recent comments suggest that the Federal Reserve is in no hurry to cut rates, and at the time of writing this report, markets expect only one rate cut before the end of 2024, according to data from the Chicago futures market.

Markets and companies

Stocks in the US rise; the S&P aims to break its 3-day losing streak. United Airlines rose more than +6% after reporting a smaller-than-expected loss in earnings and surpassing revenue forecasts. J.B. Hunt Transport Services fell more than -7% after failing to meet analysts’ expectations. These figures came after the Dow managed to break a six-day losing streak on Tuesday, boosted by UnitedHealth’s post-earnings rally. Although Tuesday marked the third consecutive day of declines for the S&P and the Nasdaq. These movements also come after Jerome Powell said that the Fed needs to see more progress on the inflation front before the central bank starts cutting rates. The comments did little to ease market pessimism. In Europe, stocks rise despite the Fed´s comments that rattled markets. The Stoxx 600 was up 0.6% by 1:10 p.m. London time, with most sectors trading in positive territory. Mining stocks were up +2.5% while technology stocks were down -1.7%. In Asia, markets had mixed figures after a broad sell-off on Tuesday; and Singapore exports fell more than expected. In Mexico, the IPC is up (+0.15%), standing at 55,883 points. As for commodities, US crude oil fell below $85 per barrel (WTI $84.63) as the market eliminates the risk of a wider war between Israel and Iran that could disrupt supply. Finally, cryptocurrencies are down.

After yesterday’s trading session, the exchange rate fluctuated between a low of 16.91 and a high of 17.08, currently trading at 16.89.

Yesterday afternoon, América Móvil presented its first-quarter results, which came in line with our estimates. Revenues were $203.298 billion pesos, recording a decrease of -2.7% year-over-year (y/y). EBITDA decreased by -2.6% y/y, reaching $80.584 billion pesos. The EBITDA margin remained stable at 39.6%. Net income fell by -55.2% y/y, totaling 13.494 billion pesos. The company ended this first quarter with 311.6 million subscribers, increasing +3.6% y/y, with countries like Brazil, Austria, Colombia, and Mexico leading said growth.

Gfnorte’s results for 1Q24 continued to show solid performance, albeit in line with expectations, resulting in a neutral implication from the report. Gfnorte reported 10.1% growth in its portfolio, while the net interest margin before provisions increased by 9.6% y/y, and net income did the same in +9.1% y/y. Quarterly ROE stood at 22.2% compared to 21.5% in 1Q23, while the net interest margin closed at 6.5%.

Corporate news

*Travelers’ shares fell almost -5% after the insurance company reported a loss in revenue and earnings for its first quarter.

*ASML Holding’s shares fell -5% after the Dutch semiconductor company reported revenue and new bookings that were below consensus analyst estimates.

*Urban Outfitters’ shares fell -5% after a downgrade to “underperform” from “hold” by Jefferies. The investment firm said that foot traffic growth appears to be slowing at Urban Outfitters stores.