The Day at a Glance | December 27 2024

The Top

● China’s industrial profits narrowed their decline in November, but 2024 is likely to be the worst year in decades.

● President Frank-Walter Steinmeier dissolved Germany’s lower house of parliament on Friday to pave the way for early elections on February 23, following the collapse of Chancellor Olaf Scholz’s tripartite coalition.

● German business associations view their current situation as worse than a year ago and remain pessimistic about the coming year, according to a survey released on Friday by the German Economic Institute IW.

● Some Bank of Japan policymakers viewed conditions as aligning for an imminent rate hike, with one predicting a move “in the near future,” according to a summary of opinions from the bank’s December meeting, keeping alive the possibility of a January hike.

● NATO announced on Friday it would boost its presence in the Baltic Sea following the suspected sabotage of an undersea power cable and four internet lines this week, while alliance member Estonia launched a naval operation to guard a parallel electricity link.

● South Korea’s parliament impeached acting President Han Duck-soo on Friday, less than two weeks after suspending President Yoon Suk Yeol’s powers over his brief declaration of martial law, plunging the country into deeper political turmoil.

● Oil prices rose nearly 1% on Friday and are on track for a weekly gain, driven by expectations of an economic recovery spurred by stimulus measures in China and forecasts of lower U.S. crude inventories.

Economic Environment

China’s industrial profits narrowed their decline in November, but 2024 is likely to be the worst year in decades. China’s industrial profits fell at a slower pace in November, according to official data released on Friday, although the annual decline in earnings this year is expected to be the worst in more than two decades due to persistently weak domestic consumption. Industrial profits dropped 7.3% in November compared to the same month last year, following a 10% fall in October, data from the National Bureau of Statistics (NBS) showed. This narrower decline in November indicates an improvement in profits as recent economic stimulus measures begin to take effect. However, in the first 11 months of 2024, industrial profits declined by 4.7%, deepening from a 4.3% drop in the January-October period, reflecting still weak private demand in the Chinese economy. In this context, Chinese officials committed at a key policy meeting this month to increase the deficit, issue more debt, and ease monetary policy to maintain stable economic growth. Additionally, the government recently pledged to step up direct fiscal support to consumers and strengthen social security. Overall, the world’s second-largest economy has faced significant challenges in achieving a strong post-pandemic recovery, as spending and investment by businesses and households remain subdued amid a prolonged housing downturn and new trade risks stemming from the incoming U.S. administration of President-elect Donald Trump.

Markets and companies

In the United States, futures for the main indices were trading positively. The stock market is on track to close the week with gains, primarily driven by tech companies such as Tesla, Google, and Apple. In Europe, markets were mostly in positive territory, with notable performance from Danish pharmaceutical company Novo Nordisk. Meanwhile, in Asia, markets closed in positive territory. In China, industrial sector profits showed a fourth consecutive decline in November, recording a year-over-year contraction of -7.3%.

In the commodities market, oil prices have shown positive weekly performance, supported by expectations of fiscal stimulus in China. In contrast, gold prices fell at the opening, although they maintain a positive trend for the week.

The yield on the 2-year U.S. Treasury note remains at 4.33%, while the 10-year note stands at 4.60%.

In Mexico, IPC futures were trading higher, reaching 50,485 points. Meanwhile, the exchange rate stood at 20.30 pesos per dollar, compared to 20.23 in the previous close.

Corporate news

OpenAI announced its transformation into a for-profit public company, seeking capital to compete in the artificial intelligence market valued at $1 trillion.

Nippon Steel reported that it would delay the closing of its $14.9 billion acquisition of U.S. Steel. Initially scheduled for the third or fourth quarter of 2024, the process has been rescheduled for the first quarter of 2025 due to regulatory uncertainty in the United States.