The Day at a Glance | April 2 2024

The Top

*The US Manufacturing ISM indicates expansion in March 2024.

*The Eurozone´s manufacturing PMI fell to its lowest level in three months in March.

*The Bank of China says its net interest margin will continue to face pressure this year.

*Inflation in Germany fell to its lowest level in almost three years.

*Japan warns it will take action against excessive yen volatility.

*Oil rises on expectations of increased demand and as concerns in the Middle East grow.

*The Nasdaq gained 9% in the first quarter driven by an increase in artificial intelligence-related stocks, such as Nvidia. 

Economic environment

The US Manufacturing ISM indicates expansion in March 2024. The ISM indicator stood at 50.3 points, breaking a sixteen consecutive month streak of shrinking figures, meaning below the 50-point threshold. Thus, March´s data exceeded consensus expectations, which were forecasting a reading of 48.4 points, slightly higher than the 47.8 points logged the previous month. This positive performance was mainly due to a rebound in production (54.6 vs. 48.4 prev.) and new orders (51.4 vs. 49.2 prev.). Additionally, exports remained in growing territory, while order backlogs moderated. On the other hand, employment continued to decline, dropping from 47.4 points in February to 45.9 points in March. Meanwhile, prices continue to rise due to volatility in commodity prices. The reading of the manufacturing ISM suggests that the US economy remains strong, with the Atlanta Fed’s GDPNow model revising its GDP growth estimate from 2.3% to 2.8% for 1Q24 after the publication of this data.

The Eurozone´s manufacturing PMI fell to its lowest level in three months in March. The PMI index stood at 46.1 points in March, down from 46.5 in February, although exceeding expectations that stood at 45.7. The reading suggests contraction in the sector, as the figure set below the 50-point threshold. A reading above 50 suggests expansion. The decline in the index is due to two components: i) Supplier delivery times and ii) Inventory purchases, as disruptions in the Suez Canal decrease. By country, evidence of recovery was found in Greece and a modest expansion was logged in Spain, while Italy showed improved conditions, and both France and Germany continued in shrinking territory. The manufacturing PMI´s index suggests that the sector’s recession in the Eurozone extended into the first quarter of 2024.

Markets and companies

Global markets with negative sentiment. US major indices closed lower yesterday as bond yields rise and expectations for the Federal Reserve to cut interest rates in June diminish. This morning, markets started the day in negative territory: Dow -1.19%, S&P -0.92%, and Nasdaq -1.39%. In Europe, markets are presenting losses, with the Euro Stoxx down -0.70%. In Asia, Hong Kong led gains in the Asia-Pacific markets as Xiaomi stocks surged and economic data from South Korea and Australia were assessed. Japan’s Nikkei 225 recovered to close 0.09% higher at 39,838.91. In Mexico, the IPC opened higher, standing at $57,662 points (+0.02%). The price of oil increased, and reached its highest level since October due to renewed concerns about global supply, reaching $84.74 per barrel (+1.20%). Natural gas is down (-1.90%). Meanwhile, metals mostly rose, with gold +0.60%, silver +1.70%, and copper +1.10%. Lastly, cryptocurrencies are declining. The exchange rate fluctuated during the early hours, reaching a minimum of 16.57 and a maximum of 16.65, currently trading at 16.61.

Corporate news

*Tesla’s stocks fell 7.3% after it released its first-quarter vehicle production and delivery report, recording a total of 386,810 deliveries for the period. However, deliveries of around 457,000 were expected for the period ending March 31st. 

*Shares of health insurance and managed care companies, such as Humana and UnitedHealth, fell after the Centers for Medicare & Medicaid Services announced that rates for the 2025 calendar year will increase by 3.7%, as previously proposed. Humana dropped by 9.6%, while CVS Health plummeted 5.3%.