The Day at a Glance | August 7 2024

The Top

• The Citi Survey revealed that most analysts anticipate Banxico’s next move will be a 25 basis point cut in its September meeting.

• In China, imports are growing again, but exports surprised with a smaller-than-expected increase.

• On Wednesday, the Bank of Japan’s Deputy Governor said that the central bank will not raise interest rates when markets are unstable.

• Olli Rehn, the Finnish member of the European Central Bank, stated that the ECB may continue cutting interest rates if the downward inflation trend strengthens.

• On Wednesday, oil prices rebounded from multi-month lows due to concerns that an escalation in the Middle East could affect oil production, even as concerns about weak crude demand persist.

• US stocks are up for a second day after breaking a three-day losing streak.

Economic Environment

The Citi Survey revealed that most analysts anticipate Banxico’s next move will be a 25 basis point cut in itsSeptember meeting. The consensus expects July´s CPI to increase by 1.02% m/m for the general rate and 0.29% m/m for the core rate. For the next 12 months (July/July), and on an annual basis, inflation is expected to set at 3.75%. By the end of the year, expectations for general and core inflation are at 4.60% (previously 4.40%) and 4.00% (previously 4.00%), respectively. For 2025, estimates are set at 3.90% (previously 3.85%) and 3.80% (previously 3.79%), in the same order. Regarding the funding rate, it´s expected to close 2024 at 10.50% (previously 10.25%), and most analysts expect that Banxico’s next move will be a 25 basis point cut in its September meeting. The exchange rate is expected to close 2024 at 19.00 pesos per dollar and at 19.70 pesos per dollar in 2025. Real GDP growth for 2024 is forecasted at 1.7% (previously 1.9%) and at 1.5% (previously 1.5%) for 2025.

In China, imports are growing again, but exports surprised with a smaller-than-expected increase. June´sexports recorded a 7.0% y/y increase, below the consensus expectation of a 9.9% y/y rise. Thus, exports have now expanded for four consecutive months following previous data (8.6% y/y in June, 7.6% y/y in May, and 1.5% y/y in April). Meanwhile, imports returned to positive territory with a 7.2% y/y increase, surpassing the consensus expectation of a 4.2% y/y rise after a -2.3% decrease was logged in June. Overall, China’s exports increased at their slowest pace in three months in July, raising concerns about growth forecasts in the manufacturing sector; meanwhile, the rush to boost chip supply ahead of expected US technological restrictions led to an increase in imports.

Markets and Companies

US stocks are up for a second day after breaking a three-day losing streak. Investors are also looking to recoup more of the losses suffered earlier in the week. Yesterday, the S&P 500 and the Nasdaq increased 1%, and the Dow was upnearly 300 points. In Europe, markets are rising as they seek to recover from Monday’s decline. The Stoxx 600 was up 1.49% at 2:00 p.m. London time, with most regional indices and sectors in the green. Banks were up 2.83%, while construction and materials stocks rose 2.47%. In Asia, markets are following the rebound of major Wall Street indexes; additionally, investors are assessing China’s July trade balance data, which showed imports grew faster than expected, while exports fell short of expectations. As for commodities, US crude oil has risen to nearly $75 per barrel after recession fears shook the market. Additionally, tensions in the Middle East and OPEC+ production cuts are providing a floor for prices. Metals and cryptocurrencies are loggingmixed figures. In Mexico, the IPC is up and stands at 52,445points. 

The exchange rate is at $19.17, after closing at $19.58 yesterday.

Corporate News

• Airbnb shares fell nearly 14% after the company provided weaker-than-expected revenue guidance for the third quarter.

• Lyft shares dropped more than 13% after the ride-hailing company provided disappointing revenue guidance for the third quarter.