The Day at a Glance | December 18 2024

The Top

• In Mexico, aggregate demand rebounded in the third quarter. 

• Later today, the Federal Reserve is expected to reduce the federal funds rate by 25 basis points, while updated economic forecasts covering the first months of the incoming Trump administration will also be released.

• UK inflation reached an eight-month high in November, but service price increases remained steady, providing some relief to the central bank.

• On Wednesday, China’s central bank urged financial institutions to guard against interest rate risks when trading bonds, signaling concern among Chinese officials over recent frenzied buying that has sharply reduced yields.

• Japan’s exports rose faster than expected in November, boosted by a weaker yen and robust global demand. However, companies remain concerned that US protectionist trade policies could hinder future growth.

• Oil prices traded in a narrow range on Wednesday as investors assessed a possible Fed rate cut and a drop in US crude inventories. Brent futures rose 0.57% to $73.61 per barrel, while WTI crude increased 0.67% to $70.55 per barrel.

Economic Environment

In Mexico, aggregate demand, equal to aggregate supply, increased by 1.2% (q/q) in the third quarter, according to seasonally adjusted real figures. On the supply side, GDP increased by 1.1% q/q, and the import of goods and services rose by 1.4% q/q. On the demand side, private consumption increased by 1.1% q/q, while government spendingincreased slightly by 0.3% q/q. Gross fixed capital formation rose by 1.1%, and exports expanded by a robust 5.1% q/q, also based on seasonally adjusted figures. On an annual basis and using original figures, aggregate demand expanded by 2.3% (previously 2.1%) in the third quarter of 2024. Gross fixed capital formation increased by 1.3% (previously 6.6%), private consumption by 3.0% (previously 4.3%), government spending by 1.8% (previously 2.5%), and exports rose significantly by 8.0% (previously -1.9%).Overall, aggregate demand figures logged a rebound in Mexico´s economy during the third quarter, primarily driven by increased export activity, despite a significant slowdown in gross fixed capital formation.

Markets and Companies

Dow Jones futures are rebounding after nine consecutive days of losses as investors await the Federal Reserve’s decision. 

The Dow’s worst streak in 46 years was mainly driven by a rotation out of old-economy stocks into tech stocks, a sector that this century-old index underweights compared to broader market metrics. Despite the losing streak, the Dow remains less than 4% below an all-time high.

In Europe, stocks are trading higher as investors analyze UK inflation data. The Stoxx 600 was up 0.24% at 12:25 p.m. London time, with sectors logging mixed figures. 

Meanwhile, in Asia, markets closed with mixed figures as investors assessed Japan’s trade data ahead of the Bank of Japan’s interest rate decision this week.

In commodities, oil prices rose slightly on Wednesday as investors remained cautious about a potential Fed rate cut; a decline in US crude inventories provided an additional increase.

Metals are posting mixed figures, and cryptocurrencies are down. 

In Mexico, the IPC is up 0.37%. The exchange rate stands at 20.17 after setting at 20.18 at market close yesterday.

Corporate News

• Shares of General Mills (maker of consumer food products like Cheerios and Cocoa Puffs) dropped 5% after cutting its outlook for 2025.

• Shares of Nvidia rose nearly 3% after four consecutive losing sessions. The chipmaker entered correction territory after falling 10% from its all-time high earlier in the week.