The Day at a Glance | April 19 2024

The Top

*The Mexican peso depreciated after Israel’s attack on Iran.

*Retail sales in Mexico surprisingly surged in February.

*Christine Lagarde, President of the European Central Bank, stated that the Eurozone´s inflation is likely to continue to decline, and the ECB could cut rates if price growth forecasts are met.

*A Reuters survey revealed that more increases in the Bank of Japan’s benchmark rate are expected to be carried out before the end of 2024.

*The Bank of China is widely expected to keep its benchmark interest rates unchanged in its next monetary policy meeting on Monday.

*The Nasdaq index declined after Netflix reported its quarter earnings. 

Economic environment

The Mexican peso depreciated after Israel’s attack on Iran. Yesterday afternoon, explosions were reported in several cities in Iran, five days after an initial Iranian attack on Israel. However, Tehran downplayed the incident and indicated it had no plans for retaliation, seemingly aiming to avoid a full-scale war in the region. The potential escalation in tensions in the Middle East caused the Mexican peso to depreciate by -0.9%. Yesterday, the closing rate for the Mexican currency was 17.07 pesos per dollar; it then reached a level of 18.12 pesos per dollar shortly after the explosions. Today, the opening rate was 17.22 pesos per dollar. Additionally, Brent oil futures are trading at $87.08 per barrel, while WTI is at $82.82 per barrel. The limited escalation of the attack and Iran’s silent response seem to indicate that diplomatic efforts have been successful in preventing a full on war in the region. However, speculation and risk aversion continue to move investor positions towards safe-haven assets.

Retail sales in Mexico surprisingly surged in February. INEGI reported that retail sales increased 0.4% in February, on a monthly and seasonally adjusted basis, surpassing consensus expectations by 0.2%. On an annual basis, and according to non-seasonally adjusted figures, sales increased 3.0% in February. Additionally, there was notable growth in online sales (+23.1%), household goods (9.5%), health products (6.4%), supermarkets and department stores (5.1%), motor vehicles and fuels (4.9%), and groceries, food, and beverages (1.5%), while they fell in textiles (-8.3%), stationery (-8.3%), and hardware stores (-5.2%). The retail sales report indicates that the economy rebounded in February, following a surprising decline in January. Additionally, this contributes to the expectation of a rebound in the IGAE (Monthly Indicator of Economic Activity) for services in February.

Markets and companies

Global markets with mixed sentiment. Major US indices closed the previous day with losses. This morning, markets started the day with mixed figures. The S&P 500 is down -0.07% and is heading towards its worst week in almost six months. The Nasdaq is down -0.51% and is on track to record its fourth consecutive week of negative figures, its longest negative streak since December 2022. The Dow has logged mixed movements this week, and started today’s trading session in positive territory (+0.34%). In Europe, markets are logging losses, with the Euro Stoxx down -0.21%. In Asia, markets recorded a contraction: Japan -2.66% and China -0.29%. In Mexico, the IPC opened higher, standing at $55,834 points (+0.17%). Oil is at $82.82 per barrel (+0.1%) after Israel launched a military attack on Iran. Natural gas is up (+2.90%). Meanwhile, metals are up, with gold +0.10%, silver +0.50%, and copper +0.80%. Lastly, cryptocurrencies are up, with Bitcoin surpassing $64,000 on Friday morning. 

The exchange rate fluctuated during the early hours, ranging from a minimum of 17.17 to a maximum of 17.98, currently trading at 17.23.

Corporate news

*Netflix fell 6% after sharing a weaker-than-expected annual revenue growth outlook.

*Paramount surged 10% after The New York Times and Bloomberg reported that Sony Pictures Entertainment and Apollo Global Management have been discussing the possibility of partnering to acquire Paramount in a joint bid.