The Day at a Glance | August 19 2024

The Top

• In Mexico, $31.096 billion were captured between January and June 2024 in Foreign Direct Investment (FDI), a historic high for the first half of the year.

• According to a Reuters survey, the Fed will cut the federal funds rate by 25 basis points in each of the three remaining meetings in 2024.

• US Secretary of State Antony Blinken warned on Monday of a last-ditch effort to secure a ceasefire in Gaza and a hostage release deal, saying it was the best and possibly the last opportunity to achieve it, urging Israel and Hamas to reach an agreement.

• The latest Chinese economic figures increased pressure on Beijing to issue more fiscal stimulus and even distribute shopping vouchers to reach this year’s 5% growth target.

• Oil prices fell on Monday, with Brent remaining below $80, as concerns over demand in China, the world’s largest oil importer, weighed on market confidence.

Economic Environment

In Mexico, $31.096 billion were captured between January and June 2024 in Foreign Direct Investment (FDI), a historic high for the first half of the year. This FDI figure is a 7.07% increase compared to the $29.041 billion reported a year earlier in the first semester of 2023, according to the Secretariat of Economy and preliminary figures. Reviewing FDI figures for the first half of 2024, $30.288 billion came from profit reinvestment (1S23: $22.609 billion), $909 million from new investments (1S23: $2.135 billion), and -$101 million from accounts between companies (1S23: $4.297 billion). On this occasion, the Secretariat of Economy provided detailed figures, revealing that profit reinvestment resulted from $33.874 billion directly from profit reinvestment, meaning inflows, and $3.586 billion from dividend payments, meaning outflows, resulting in the previously reported balance of $30.288 billion. Meanwhile, in new investments, +$717 million were recorded from new companies, +$481 million from capital contributions, and -$289 million from company cancellations. These figures point out that Mexico continues to attract inflows, and the detailed data from the Secretariat of Economy allows for a better evaluation of the continued arrival of new companies. However, it will be important to determine if historical trends will be established to evaluate the nearshoring phenomenon in detail. We do not rule out slight moderation in flows going forward, especially as the disinvestment of Iberdrola’s assets from the sale of 13 plants remains to be recorded, as well as due to circumstantial factors like the US presidential elections. In any case, the consensus estimates that flows of around $37.7 billion could be captured this year.

Markets and Companies

The S&P 500 is stable after posting its best week of 2024. Stocks are coming off a winning week amidst a volatile period for markets. The S&P 500 rose 3.9% in its best week since 2023. The Nasdaq and Dow Jones increased 5.2% and 2.9%, respectively. In Europe, stocks extended their positive momentum after rallying last week. The Stoxx 600 was up 0.47% at 2:15 p.m. London time, with most sectors trading in positive territory. Mining and retail stocks were up 0.60% and 1.39%, respectively, while the healthcare sector fell 0.14%. Meanwhile, Asian markets are showing mixed movements as investors await a slew of inflation data and central bank decisions this week. Regarding commodities, oil prices are down for the fourth session in five as the US pushes to secure a cease-fire deal to end the fighting in Gaza. Metals and cryptocurrencies are logging mixed figures. In Mexico, the IPC is up 0.19% and stands at 54,188 points.

Over the weekend, the exchange rate fluctuated between a low of 18.62 and a high of 18.80, currently trading at 18.79.

The National Association of Self-Service and Department Stores (ANTAD for its acronym in Spanish) reported July´s sales results. Same store sales increase +1.2% and total sales rose +4.0% compared to the same period of 2023. 

Corporate News

• AMD shares rose nearly 3% before the market opened following the news that the semiconductor company would acquire ZT Systems in a $4.9 billion deal.

• Estée Lauder shares fell 4% after the company issued disappointing first-quarter results and a full-year outlook.