The Day at a Glance | February 1 2024

The Top

*The Federal Open Market Committee (FOMC) maintained the range of the federal funds rate at 5.25%-5.50% in its monetary policy decision.

*Inflation in the Eurozone decreased from 2.9% in December to 2.8% in January.

*Unemployment insurance claims stood at 224,000 in the week ending January 27th, which is 9,000 more than the previous week.

*The Bank of England kept its benchmark interest rate at 5.25% in a divided decision. Six members voted to maintain, two to increase by 25 basis points, and one to cut it to 5.0%.

*Today is a key day for financial results in the tech sector, as after the market close, Apple, Amazon, and Meta are expected to disclose their earnings reports.

Economic environment

The Federal Open Market Committee (FOMC) maintained the federal funds rate at 5.25%-5.50% in its monetary policy decision. The decision was in line with the market consensus. The statement highlighted two changes: 1) The economic environment is described as uncertain, and 2) The committee explicitly pointed out that it is not appropriate to cut the rate until there is more certainty that inflation is descending towards the FOMC’s target. In a press conference, Federal Reserve Chairman Jerome Powell emphasized that there is good progress towards the Fed’s dual mandate, as inflation has decreased from its highs without a significant rebound in unemployment. However, inflation is still very high, it cannot be guaranteed that it will continue to decline, and its future trajectory is uncertain. Regarding the latter, Powell mentioned that more data is needed to build confidence that inflation will return to the two percent target. The next monetary policy announcement will take place on March 20th. For this announcement, we estimate that the range of the federal funds rate will remain unchanged between 5.25% and 5.50%. Additionally, the FOMC points and the Fed’s macroeconomic scenario will be published. We do not expect changes, maintaining the committee’s expectation of a total of 75 basis points in cuts throughout the whole year.

Markets and companies

Global markets with mixed sentiment. Futures for major U.S. indices seek to recover from a challenging Wednesday session. The Dow Jones Industrial Average fell by 0.8%, marking its worst day since December. The S&P 500 dropped by 1.6%, its worst day since September. The Nasdaq Composite lost 2.2%, recording its worst session since October. Despite this, all three major indices closed January in the green. Today, the Nasdaq index leads this morning with a 1.00% increase. The Dow is up by +0.33%. The S&P 500 rose by +0.80%. Meanwhile, the yield on the 10-year Treasury bond decreased by -0.02 basis points, settling at 3.91%. In Europe, markets remained unchanged with the EuroStoxx at 0.03% after the Bank of England kept interest rates unchanged and inflation data in the Eurozone presented a mixed picture. In Asia, markets closed lower, with China at -0.64% and Japan’s Nikkei 225 down by -0.76%, closing at 36,011.46. In Mexico, IPC futures continue to rise, reaching $58,026 points (+1.14%). Oil prices increased slightly as the market took in the OPEC meeting´s results and the Federal Reserve’s decision on interest rates. OPEC said on Thursday that its members were complying with production cuts after reviewing November and December´s data. The price is at $76.61 per barrel. Natural gas prices are on the rise. Gold gained territory, with an ounce trading at $2,034.72, although prices moved due to a stronger dollar after the Federal Reserve resisted the idea of cutting rates in March. Still, the precious metal maintained its position as investors clung to hope that interest rates would be cut later in the year. Silver is trading at $22.57 per ounce, and copper at $386.60 per pound. Lastly, cryptocurrencies are mixed, with Bitcoin trading at 42,175.

After yesterday’s trading session, the exchange rate fluctuated between a low of 17.18 and a high of 17.28, currently trading at 17.24.

Grupo México Transportes reported its results for the fourth quarter of 2023 yesterday afternoon. Revenues increased by 1.2% compared to the previous year, reaching a total of $13,926 million, although slightly below expectations. The automotive segment stood out with a 25% increase in quarterly revenues. On an annual basis, the Automotive and Cement segments led revenue growth. At the close of 2023, total revenues amounted to $56,429 million. Annual transported volume experienced a 3.6% increase, with the Automotive segment being the main driver with a 17% growth

Corporate news

*Qualcomm fell by 2% despite reporting first-quarter fiscal results that exceeded earnings and revenue estimates, citing strength in phone chip sales.

*Honeywell fell more than 2% after the company reported mixed results for the fourth quarter. The company earned $2.60 per share, with revenues of $9.44 billion. Analysts expected earnings of $2.59 per share and revenues of $9.7 billion.

*Paytm’s shares fell 20% to their lowest level in almost seven weeks after the Reserve Bank of India ordered the digital payment provider to stop accepting new deposits for its popular wallet accounts starting March.

*General Motors increased by approximately 1% after Morgan Stanley maintained its “overweight” rating and raised its price target for the stock.