The Day at a Glance | August 27 2024

The Top

• Mexico’s trade balance logged a small deficit in July.

• A Reuters report stated that extortion has become a structural and growing issue, affecting inflation and the role of Mexico’s Central Bank.

• The president of the Dutch Central Bank stated that the European Central Bank could gradually cut rates if inflation continues to fall.

• UK retail sales fell for a third consecutive month in August, with a potential further decline in September, according to data from the Confederation of British Industry.

• Brazil’s inflation for the first half of August stood at 4.35%, almost in line with the consensus estimate of 4.37% and below the 4.45% reported a month earlier.

• Oil prices fell slightly during Tuesday’s session after rising nearly 7.0% in the previous three sessions, driven by fears of escalating conflicts in the Middle East and concerns over crude production in Libya.

Economic Environment

Mexico’s trade balance logged a small deficit in July. In July 2024, a trade deficit (exports minus imports) of just $72 million was recorded, compared to a $645 million deficit in the same month of 2023. In July 2024, exports increased 14.7% year-over-year and logged a -10.2% drop in oil exports and a 16.2% increase in non-oil exports. Among non-oil exports, those directed to the US rose by 18.0% y/y, while those directed to the rest of the world increased by 7.1% y/y. As for imports, they recorded a 13.3% y/y increase in July 2024, resulting from a 15.9% annual rise in non-oil imports and a -15.6% decline in oil imports. By types of goods, consumer goods imports increased by 16.5%, intermediate goods by 13.3%, and capital goods by 8.7%. As a result, in the January – July 2024 period, the trade balance posted a deficit worth $5.57 billion, compared to a $7.15 billion deficit in the same period last year. Trade balance figures suggest that this year’s trade deficit could be lower than last year’s at -0.3% of GDP, considering the cumulative deficits for the first seven months of 2024. 

Markets and Companies

Main US stock indices are logging mixed figures, with the market awaiting Nvidia’s quarterly results. Nvidia has become a benchmark for the tech sector, buoyed by optimism surrounding developments in Artificial Intelligence. On the economic front, attention remains focused on Friday’s release of the Personal Consumption Expenditures (PCE) inflation data, which could shape expectations of interest rate cuts by the Federal Reserve for the remainder of the year. In Europe, stock markets are up and are being driven by gains in the mining and automotive sectors, while mixed figures were seen in Asia.

In the debt market, Treasury bond yields are slightly up. In recent sessions, investors have incorporated expectations that the Federal Reserve will begin a cycle of rate cuts in September. The 10-year bond yield stands at 3.86%.

In commodities, oil prices are down following yesterday’s rise, driven by Libya’s announcement of production cuts. Gold is showing a slight decline but remains above $2,500 per ounce.

In Mexico, the IPC is up and is trading at 53,273.5 points.

As for the peso-dollar exchange rate, it stands at 19.57 after closing at 19.40 yesterday.

Fibra Monterrey signed a binding agreement to sell the office building previously occupied by Axtel for up to US$15 million plus VAT. The property is 100% vacant, so immediately after the transaction is settled, which is expected to occur during 4Q24, the available cash flow for distributions will increase.

Corporate News

• Paramount shares were down after Edgar Bronfman withdrew his acquisition offer for the company.

• Eli Lilly announced a new, lower-cost version of its weight loss treatment.

• JD.com announced a $5 billion stock buyback program.