The Day at a Glance | April 30 2024

The Top

• Mexico´s economy grew by 2.0% in 1Q24 according to the timely Gross Domestic Product estimate and seasonally adjusted figures.

• China’s PMIs logged a slowdown in activity duringApril, although they continue to expand.

• In the Eurozone, data for 1Q24 GDP logged a 0.4% y/ygrowth rate (0.2%e.) and April´s inflation remained unchanged at 2.4%, in line with estimates.

• Japan´s Vice Minister of Finance said they are ready to address currency matters at any time as data suggests a 35 billion yen intervention by the government should be carried out. 

• Oil stabilized on Tuesday after the previous day’s decline, as talks between Israel and Hamas offered hopes of a ceasefire; meanwhile, investors await signals on US interest rates ahead of the Fed meeting this coming Wednesday.

• The busiest corporate earnings week is set to continue with Amazon and Apple.

Economic Environment

Mexico´s economy grew 2.0% in 1Q24 according to the timely Gross Domestic Product estimate and seasonally adjusted figures. Thus, the economy grew very close to our estimate and the market’s at 2.1%, and moderated its annual rate compared to the fourth quarter of 2023 by 2.5%. Concerning quarterly changes, the Mexican economy grew by 0.2% in the first quarter of 2024, marking ten consecutive quarters of growth. This figure compares positively against the 0.1% q/q forecasted by the analysts’ consensus. A -1.1% q/q decline was logged in primary activities, as well as a -0.4% q/q drop in industrial production, while tertiary activities increased by 0.7% q/q. In annual terms, and according to seasonally adjusted figures, primary activities increased 1.3%, secondary activities by 1.5%, and tertiary activities did the same in 2.5%. The timely GDP figure suggests that March´s IGAE possibly grew at a monthly rate similar to February´s (1.4% m/m), indicating that the Mexican economy is accelerating in the run-up to itspresidential elections.

China’s PMI´s logged positive results in April. China’s composite PMI set at 51.7 points in April, decreasing from March´s 10-month high (52.7). The non-manufacturing PMI stood at 51.2 points (53.0 prev.), marking sixteen consecutive readings above the 50-point threshold. Meanwhile, the manufacturing PMI set at 50.4 points, slightly down from March’s 50.8. Thus, the manufacturing indicator has posted two consecutive months of expansion amidst Beijing’s continuous efforts to revive the sector. Overall, China´s latest PMI figures suggest that the world’s second-largest economy is still struggling to recover amidst weak domestic demand, persistent deflationary risks, and continuous weakness in the real estate sector.

Markets and Companies

Global markets with negative sentiment. Major US indices closed higher yesterday. This morning, markets started the day in negative territory, after higher-than-expected wage data raised new concerns about inflation ahead of the Federal Reserve’s interest rate decision this Wednesday: Dow -0.48%, S&P -0.27%, and Nasdaq -0.27%. In Europe, markets are recording losses, with the Euro Stoxxdown -0.78%, and most sectors are trading in the red, with a-3.34% decline in the automotive sector, while food and beverage stocks are up +0.68%. In Asia, markets closed mixed: Japan’s Nikkei 225 was up +1.24% at 38,405.66points as they returned from holiday, and China was down -0.26%. In Mexico, the IPC is down, standing at $57,784 points. Oil is down after Israeli Prime Minister Benjamin Netanyahu dismissed hopes that a possible hostage deal would prevent an attack on the southern city of Rafah in Gaza, with the price now at $82.35 per barrel. Meanwhile, most metals are down, with gold -1.0%, silver -1.9%, and copper -2.1%. Lastly, cryptocurrencies are down.

The exchange rate fluctuated during the early hours, reaching a minimum of 16.95 and a maximum of 17.06, currently trading at 17.02.

Yesterday afternoon, Peñoles reported its first-quarter 2024 results. Sales recorded a decrease of -1.2% year-on-year, amounting to $1,396.5 million, impacted by lower prices of base metals such as zinc, copper, and lead, which were not offset by a higher processed volume of zinc and the rise in gold and silver prices. Regarding EBITDA, it totaled $196.6 million, logging a decline of -21.8% year-on-year, and the EBITDA margin stood at 14.0%, lower than the 17.8% recorded a year ago. Lastly, the company reported a net loss of $-39 million.

Femsa Digital signed an agreement with Conekta for the purchase of assets enabling Oxxo Pay. For Femsa Digital, the transaction would involve the integration of various technological and operational elements of Conekta that currently enable Oxxo Pay, a digital solution that allows businesses to increase their sales by receiving cash payments in Oxxo stores for their products or services offered online. The acquisition will be carried out in different stages and is expected to be completed during the second semester of 2024.

América Móvil reported a cash ordinary dividend of $0.48 per share, which will be paid in two parts of $0.24 each, on July 15^th and November 11^th, 2024, to all shares representing its share capital.

Corporate News

McDonald’s shares fell -2.0% after results came in below consensus estimates.

3M shares increased +7.7% after reporting earnings of $2.39 per share on revenue of $7.72 billion. This exceeded analysts’ estimates of $2.10 per share on adjusted revenue of $7.63 billion.