The Day at a Glance | April 4 2024

The Top

*In Mexico, cyclical indicators suggest improvement going forward.

*Producer inflation in the Eurozone decreased by -8.3% y/y in February 2024, after a -8.0% drop was logged in the previous month.

*U.S. Treasury Secretary Janet Yellen arrived in Guangzhou this Thursday to discuss China’s excess production.

*Today at 9:00 am, the Central Bank of Mexico will publish its meeting minutes corresponding to the monetary policy decision made on March 21st.

*In Mexico, consumer confidence increased from 47.0 points in February to 47.3 points in March.

*Oil remains stable, driven by reduced concerns about supply.

*Major U.S. stock indices are trading higher. 

Economic environment

In Mexico, cyclical indicators suggest improvement going forward. The leading indicator, designed to anticipate the trajectory of the economy, stood at 100.6 points in February, which is +0.15 points compared to its level observed in January, marking four consecutive months of increases. A reading above 100 points suggests that the economy will grow above its long-term trend going forward. The parallel indicator, designed to reflect the current state of the economy, stood at 100.4 points in January, which is a decrease of -0.1 points compared to the previous month, indicating slight moderation in growth in January. The indicators suggest that the weakness observed at the beginning of the year should be temporary and the economy should resume its momentum.

Producer inflation in the Eurozone decreased by -8.3% y/y in February, following an -8.0% drop logged the previous month. In February, industrial production prices continued to fall at a faster pace but below market expectations, which were expecting a deeper contraction (-8.6%). This was mainly due to a -21.1% drop in energy prices. Additionally, negative changes were observed in the prices of intermediate goods (-1.5%). As for prices among capital goods, durable consumer goods, and nondurable consumer goods, these increased by 2.0%, 1.1%, and 1.4%, respectively.

Markets and companies

Major U.S. stock indices are trading higher after yesterday’s increase in the S&P 500 and Nasdaq, while the DJI recorded a decline. This week, investors are digesting employment figures; today, it was announced that weekly unemployment insurance claims stood at 221 thousand, higher than the 213 thousand expected by the consensus. Additionally, tomorrow will highlight the release of non-farm payrolls for March. The U.S. labor market is relevant because it could give signs regarding the Federal Reserve’s future monetary policy. In that regard, Jerome Powell stated that while there is still room for interest rate cuts this year, more evidence is needed that inflation converges to the 2% target.

In Europe, stock markets are trading higher, while in Asia, markets logged mixed movements.

In the bond market, investors are awaiting the U.S. employment report to be released tomorrow. The yield on the 10-year Treasury bond recorded a slight decline, standing at 4.32%, while the 2-year bond stood at 4.7%.

Concerning commodities, oil prices showed marginal movements, following the rebound observed in previous days. WTI is at 85.14 dpb while Brent is trading at 89.14 dpb.

In Mexico, the IPC is trading higher, currently at 57,519.3 points. The peso’s exchange rate against the dollar is at 16.53.

Tlevisa announced that it has reached an agreement with AT&T for the acquisition of its stake in the share capital of Sky Mexico (“Sky”), which would make the Company the holder of 100% of Sky’s share capital. As part of the agreement reached, the transaction price would be paid by the Company in 2027 and 2028. The transaction is subject to customary regulatory approvals.

Yesterday afternoon, Volaris reported its passenger traffic results for March 2024. The company transported a total of 2.3 million passengers. This implies an annual decline of -18.1% (vs 2.8m in 2023). International passenger traffic increased by +8.0% (636 thousand vs 589 thousand in 2023), in contrast to the domestic, which recorded a decline of -25.0% (1.6 million vs 2.2 million in 2023). The airline confirmed that accelerated inspections of GTD engines have significantly reduced ASM capacity, especially in the Mexican market. However, this decrease has been offset by increased capacity in international markets

Corporate news

*Levi Strauss shares were up nearly 8% as the company reported better than expected quarterly results, and also raised its earnings guidance.

*Conagra Brands reported quarterly results better than expected. Its shares were up nearly 5%.

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