The Day at a Glance | August 14 2024

The Top

• US consumer inflation figures set in line with consensus expectations.
• Mixed economic data in the Eurozone.
• Atlanta Federal Reserve President Raphael Bostic said that recent economic data has given him more confidence that the Fed can bring inflation back to its 2% target but wants to see a bit more data before backing interest rate cuts.
• Germany’s Economy Minister stated that German foreign trade is likely to remain moderate in the near future due to economic weakness in China.
• UK inflation increased less than expected, boosting expectations of a rate cut in the next monetary policy meeting.
• Oil prices remain stable on Wednesday as concerns about the conflict spreading in the Middle East slightly eased.

Economic Environment

US consumer inflation figures set in line with consensus expectations. The Bureau of Labor Statistics released its consumer price inflation figures for July, which logged a 0.2% m/m increase, in line with consensus expectations. Nearly 90% of the monthly increase was attributed to housing. Core inflation, which excludes energy and food, also recorded a 0.2% m/m increase in July, in line with the consensus forecast. On an annual basis, headline inflation fell from 3.0% in June to 2.9% in July, and core inflation decreased from 3.3% to 3.2% over the same period, according to unadjusted figures. The CPI inflation figures align with expectations of Federal Reserve rate cuts being carried out in September. The implied probabilities in federal funds rate futures estimate a 25 basis point cut.

Mixed economic data in the Eurozone. Eurozone economic activity expanded by 0.3% q/q, in line with market consensus. On an annual basis, the Eurozone economy grew by 0.6%, accelerating from the 0.5% logged in 1Q24. As for the block’s industrial production, it contracted by -0.1% m/m in June 2024. This negative performance is mainly explained by a -2.5% decline in the non-durable goods component. On the other hand, production in durable goods, energy, intermediate goods, and capital goods grew by 3.8%, 1.9%, 0.9%, and 0.7%, respectively. On an annual basis, industrial production in the Eurozone fell by -3.9% (prev. -3.3%), driven by contractions in 3 out of its 5 components. The data is mixed, as GDP set in line with consensus estimates, while industrial production has shown a clear downward trend over the past eighteen months.

Markets and Companies

The S&P 500 edges up slightly as inflation slows down to 2.9%. Consumer prices in the US rose by 2.9% annually, down from 3% in June, marking the lowest reading since 2021, according to the Bureau of Labor Statistics. Investors were closely watching the CPI reading to get a fuller picture of the state of the economy and to bolster the possibility of an interest rate cut in the central bank’s September meeting. In Europe, markets are up as investors monitor inflation reports from the US and the UK, with the latter’s inflation rising less than expected. In Asia, markets were mostly up. Japan’s Nikkei rose 0.58% to close at 36,442.43 after Kishida, Japan’s Prime Minister, announced he would step down in September; meanwhile, the broader Topix index rose 1.11% to reach 2,581.9. Both indices recorded their third consecutive day of gains. Regarding commodities, oil prices held steady after Biden indicated that Iran might refrain from attacking Israel if a cease-fire is reached. Metals and cryptocurrencies are logging mixed figures. In Mexico, the IPC is up and stands at 53,674.

The exchange rate stands at 18.86 after closing at 19.02 yesterday.

Corporate News

• Shares of Flutter Entertainment rose more than 10% after a stronger-than-expected second-quarter report. The parent company of Fanduel reported revenues of $3.61 billion, surpassing the $3.40 billion expected by analysts, according to LSEG. Flutter also raised its full-year guidance.
• Shares of Nu Holdings climbed around 4% after a better-than-expected second quarter. Nu reported adjusted earnings of $563 million on revenues of $2.85 billion. Analysts had expected a profit of $460.3 million on revenues of $2.57 billion, according to FactSet.