The Day at a Glance | April 3 2024

The Top

*In Mexico, private consumption and gross fixed investment grew by 15.3% and 2.9%, respectively, in January 2024. 

*Annual inflation in the Eurozone stood at 2.4% in March 2024. 

*The ADP private employment survey reported the creation of 184 thousand jobs in March, above the market’s expected 150 thousand. ADP employment figures suggest a moderate report for non-farm payrolls on Friday, with consensus estimating 200 thousand jobs. 

*Japan´s economy is recovering and keeping expectations alive regarding interest rate hikes on behalf of the BoJ. 

*NATO ministers are considering a military fund worth 100 billion euros for Ukraine.

*The S&P 500 retreats for the third day amidst a tough start to the quarter. 

Economic environment

In Mexico, private consumption and gross fixed investment grew by 15.3% and 2.9%, respectively, in January 2024. Gross fixed investment increased significantly in construction (20.8%) and machinery and equipment (9.7%) on an annual basis – and according to non-seasonally adjusted figures. By sector, private investment increased 15.3% year-on-year, and public investment did the same in 7.8%. Within the private sector, construction grew 23.5% and machinery and equipment by 10.0%, while the public sector showed growth rates of 9.0% and 1.4%, respectively. Meanwhile, private consumption in Mexico reported an annual increase of 2.9%. Within this, spending on imported goods increased by 17.5% year-on-year, while spending on domestic goods and services stagnated at 0.5% year-on-year, according to original figures. Gross fixed investment and private consumption contribute 25% and 70% to GDP, respectively.

Annual inflation in the Eurozone stood at 2.4% in March 2024. March´s figure set 0.2 percentage points below market forecasts and the 2.6% year-on-year rate logged in February. By components, in March, food, alcoholic beverages, and tobacco logged inflation at 2.7% year-on-year, services at 4.0% year-on-year, non-energy industrial goods at 1.1%, and energy at a -1.8% year-on-year rate. Annual inflation among major economies in the European block decreased between February and March of this year; for example, in Germany, it went from 2.7% to 2.3%, and in France, it went from 3.2% to 2.4%. Thus, inflation in the Eurozone unexpectedly fell last month, solidifying the argument for the European Central Bank to begin reducing interest rates.

Markets and companies

The S&P 500 edges lower amidst a challenging start to the quarter. ADP data released Wednesday morning showed that private payrolls grew more than expected in March. It offered another sign of resilience in the economy and sent bond yields higher as investors are increasingly concerned about the path of Fed rate cuts. Yesterday, the session was negative. Sticky inflation data and some manufacturing figures seemed to worry investors that the Fed would take longer to reduce the cost of borrowing. The yield on the U.S. 10-year Treasury note reached its highest level since November on Tuesday, while oil prices surged to their highest level since October. In Europe, the Stoxx 600 was slightly lower in afternoon trading, falling by 0.01%, with sectors trading mixed. Banks were up 0.9% while mining stocks dropped 0.2%. Wednesday was light on the corporate earnings front as investors digested fresh inflation data from the Eurozone. Prices in the Eurozone moderated to 2.4% in March, according to preliminary figures. In Asia, markets follow declines on Wall Street, and electric vehicle shares fell on demand concerns; BYD shares fell 2.5% after the Chinese electric vehicle manufacturer said its first-quarter sales fell by 43% from the previous quarter. In Mexico, the IPC is down -0.20%, standing at 57,468 points. Meanwhile, metals show mixed figures: gold -0.3%, silver +1.8%, copper +2.2%. Lastly, cryptocurrencies show mostly negative figures.

After yesterday’s trading session, the exchange rate fluctuated between a low of 16.56 and a high of 16.61, currently trading at 16.59.

Corporate news

*Intel shares fell more than 4% after the company disclosed a growing operating loss in its semiconductor manufacturing business. Intel reported an operating loss of $7 billion in 2023 for the division, compared to $5.2 billion the previous year.

*Tesla dropped approximately 1% after Guggenheim and Deutsche Bank slashed their price targets. The target cuts follow Tesla’s report of much weaker-than-expected first-quarter delivery numbers.

*Paramount Global shares increased by 2.5% after a report from The New York Times indicated that the company could enter into exclusive sale discussions with media company Skydance.