The Day at a Glance | April 22 2024

The Top

*The Global Economic Activity Indicator (IGAE) rebounded in February.

*Reuters published its 2024-2025 economic expectations survey for Mexico.

*China left its benchmark interest rates unchanged, in line with market expectations.

*ECB governors maintain their plans of carrying out multiple rate cuts throughout the year despite global uncertainty.

*The BOJ forecasts that inflation will remain around its target level, signaling its willingness to raise interest rates again this year.

*Brent hovers around $86 as traders remain unfazed by the conflict in the Middle East.

*U.S. markets are up; they seek to recover from last week’s decline. 

Economic environment

The Global Economic Activity Indicator (IGAE for its acronym in Spanish) rebounded in February. In Mexico, the IGAE, a proxy for monthly GDP, rose by 1.4% on a seasonally adjusted monthly basis, surpassing the estimated 0.6% from the Timely Economic Activity Indicator (IOAE) released last week. The rebound was due to a 16.5% m/m increase in primary activities and a 1.2% m/m hike in services, while secondary activities fell by 0.1% m/m, also according to seasonally adjusted figures. In its year-on-year variation, and according to original figures, the IGAE grew by 4.0% in February, above the consensus estimate of 3.0%. By sector, annual growth was as follows: primary activities +7.4%, secondary activities +3.3%, and services +4.8%. If we consider the IGAE´s figures up to February, and the IOAE´s March figure, it turns out that the economy grew by 2.2% y/y in the 1Q24 (vs our estimate of 2.1% y/y). 

Reuters published its 2024-2025 economic expectations survey for Mexico. GDP is estimated to grow by 2.2% and 1.9% in 2024 and 2025, respectively. General inflation is expected to set at 4.2% and 3.6%, in the same order. For the funding rate, a reduction of 50 basis points is expected each quarter, which would take it to 9.50% in 2024, and for 2025, the level would be 7.50%. The survey was conducted from April 8th to April 18th; 34 economists participated in the survey.

Markets and companies

U.S. markets are up; they seek to recover from last week’s decline. The S&P 500 and the Nasdaq fell -3.05% and -5.52%, respectively, and both have logged a six-day losing streak. Tensions in the Middle East have eased, and investors await quarterly reports from major tech companies. Tesla, Meta, Microsoft, and Alphabet are expected to report this week. In Europe, markets kicked off the week in positive territory after last week was marked by continuous tensions in the Middle East and a reassessment of interest rate expectations. The Stoxx 600 was up +0.5% at 1:40 p.m. London time, with most sectors in the green. Telecommunications stocks led the gains (+1.8%), while automobiles were down -0.9%. In Asia, markets recover from Friday’s sell-off, and investors await fresh data from China, Japan, and South Korea this week. On Friday, markets in the region were down after Israel launched an attack on Iran, causing stocks to drop and safe-haven assets to rise. In Mexico, the IPC is up (+0.28%), and currently stands at $56,018 points. Regarding commodities, U.S. crude oil remains near $83 after Iran announced it would not escalate the conflict with Israel. Metals are down: gold -2.2%, silver -4.4%, copper -0.4%.

Over the weekend, the exchange rate fluctuated between a low of 17.03 and a high of 17.25, currently trading at 17.19.

Corporate news

*Shares of Li Auto and Tesla fell more than 7% and 3%, respectively, after announcing price cuts. Tesla chopped down the sticker price of its Model 3 in China, on top of decreases in other markets, Reuters reported. Li lowered price tags on many models, including its newly launched MEGA SUV

*Verizon shares rose +1.5% after its EPS exceeded market expectations.

*Riot Platforms shares rose +5.9% after JPMorgan Chase reiterated its overweight rating. JPMorgan said it felt good about Riot’s position as a bitcoin leader.