The Day at a Glance | December 31 2024

The Top

• In China, December PMI´s showed that manufacturing expanded at a slower pace, while the services sector displayed signs of recovery.
• China’s GDP in 2024 will surpass $17.8 trillion, President Xi Jinping announced on Tuesday in his New Year’s address, adding that the country will adopt more proactive policies to boost growth in 2025.
• Chinese state-sponsored hackers breached the US Treasury Department’s cybersecurity measures this month and stole documents, an incident the Treasury described as a “serious breach.”
• Contracts for the purchase of existing homes in the US rose more than expected in November, marking their fourth consecutive month of gains, as buyers took advantage of improved inventory despite persistently high mortgage rates.
• Chinese President Xi Jinping stated in his New Year’s speech that no one can stop China’s “reunification” with Taiwan, issuing a clear warning to forces Beijing considers pro-independence, both within and outside Taiwan.
• On Tuesday, a South Korean court approved the detention of ousted President Yoon Suk Yeol as part of a criminal investigation into his martial law decree, marking the first time a sitting president in the country faces arrest.
• Oil prices are on track to close 2024 with their second consecutive year of losses, though they rose on Tuesday following data showing an expansion in China’s manufacturing activity in December.

Economic Environment

In China, December PMI´s showed that manufacturing activity expanded at a slower pace, while the services sector displayed signs of recovery. China’s composite PMI stood at 52.2 points in December, up from 50.8 in November and October. Meanwhile, the non-manufacturing PMI reached 52.2 points, marking its strongest growth since March and exceeding market expectations of 50.2. On the other hand, the manufacturing PMI dropped from 50.3 in November to 50.1 in December, slightly below market expectations of 50.3. Thus, the manufacturing index has remained above the 50-point threshold, signaling expansion, for three consecutive months. Overall, China’s manufacturing activity barely expanded in December, though the services and construction sectors logged recovery. December’s figures came after a series of stimulus measures were implemented by the government at the end of September and recent interest rate cuts were made by the People’s Bank of China, which are beginning to have an effect on some sectors of the economy. Additionally, it´s worth noting that in early December, Chinese officials declared that boosting consumption and domestic demand would be their top economic priority for the coming year. This marks only the second time in at least a decade that such a stance has been taken. However, detailed plans have yet to be disclosed. Meanwhile, risks arise from the upcoming Trump administration in the US, which has threatened to impose high tariffs on Chinese goods.

Markets and Companies

US futures are up as the S&P 500 heads toward closing its second consecutive year with a gain of over 20%, driven by rate cuts, economic strength, and artificial intelligence.

In Europe, markets are slightly higher, although trading has been subdued due to the New Year’s holiday. The Stoxx 600 opened lower but reversed course to rise +0.27% by 12:00 p.m. London time, with all sectors in positive territory.

In Asia, Chinese markets declined as the country’s manufacturing growth fell short of expectations. Notably, however, China’s CSI 300 broke a three-year losing streak with an annual increase of 15%.

In commodities, oil futures are set to end 2024 with their second consecutive year of losses, though prices rose on Tuesday following data showing that China’s manufacturing activity expanded in December. Metals are logging mixed figures, while cryptocurrencies are up.

In Mexico, IPC futures are up +1.81%. The exchange rate stands at 20.72 after closing at 20.64 yesterday.

Nemak announced a strategic adjustment to its operations and projects related to contracts for producing battery casings for fully electric vehicles. This adjustment involves a reduction in contracted capacity for the project, leading to a decrease in projected future revenue for the program. To mitigate the financial impact of this change, Nemak secured commercial agreements with the clients involved, which will substantially offset the investments made.

Corporate News

• VeriSign shares rose more than 3% in premarket trading after a regulatory filing revealed that Warren Buffett’s Berkshire Hathaway purchased additional shares in the company.
• Sangamo Therapeutics shares plunged more than 54% after the company announced that its partner Pfizer ended their joint development agreement for a hemophilia A gene therapy, delaying the product’s market prospects.