The Day at a Glance | February 14 2024

The Top

*Industrial production in the Eurozone positively surprises and grows for the first time since February.

*The federal government issued a decree forgiving the payment of Shared Profits Tax to Pemex for the last quarter of 2023 and January 2024.

*The INEGI’s timely indicator of private consumption indicates that private consumption in the domestic market would have grown by 5.2% YoY in December 2023 and 3.6% YoY in January 2024.

*The Vice President of the ECB, Luis de Guindos, said they need “a little more time and positive information” before starting to cut rates.

*UK inflation remains at 4.0%, providing relief for the Bank of England.

*Stock market futures are trading higher as expectations for interest rate cuts moderate.

Economic environment

The Eurozone´s industrial production increased 2.6% MoM and 1.2% YoY in December. December´s figures pleasantly surprised, surpassing market expectations that expected another contraction in industrial activity of -0.2% MoM and -4.0% YoY. Within the figures, an extraordinary growth of 20.5% was observed in the production of capital goods, while the production of intermediate goods decreased by -1.2%. The 2.6% MoM growth was the fastest since August 2022. In its year-on-year comparison, the following variations were recorded: 9.4% in capital goods, -5.4% in durable consumer goods, -3.7% in non-durable consumer goods, -3.6% in intermediate goods, and -1.7% in energy, also according to seasonally adjusted figures. Industrial production in the Eurozone experienced year-on-year expansion again since February 2023.

Markets and companies

U.S. stock index futures were on the rise after experiencing declines yesterday in response to the higher-than-expected January consumer inflation data. The increased inflation has tempered market expectations regarding the timing of the Federal Reserve’s interest rate cut cycle. The market assigns a probability of 37.9% for a rate cut in the May meeting and 73.4% for June.

In Asia, markets closed with losses, except for Hong Kong, reacting to the U.S. inflation data. The Nikkei recorded a 0.7% decline after reaching 34-year highs. The Kospi retreated by 1.1%, while the HSI rose by 1.0% after resuming operations following the Lunar New Year holiday. In China, the market remains closed this week.

In Europe, stock indices were trading higher, with the Stoxx 50 registering a 0.4% increase. The market reacted to corporate reports and the inflation data in the UK, which was below expectations.

In the bond market, the yield on the 10-year Treasury bond was at 4.3%, showing a slight retreat after the spike observed yesterday following the inflation figure.

Regarding commodities, WTI was at 78.1 dollars per barrel, showing a slight variation from yesterday after it was revealed that oil inventories increased more than expected last week. Gold was trading just below 2,000 dollars per ounce, experiencing pressure after the higher-than-expected inflation data tempered expectations of interest rate cuts.

In Mexico, IPC futures remained on the rise, standing at 57,440 points (+0.9%).

As for cryptocurrencies, Bitcoin continues its upward trend (+4.7%), reaching two-year highs near 2,300 dollars.

Regarding the exchange rate, the peso was at 17.14 pesos per dollar, reaching a maximum of 17.20 in the early morning. The currency took a breather after yesterday’s increase following the U.S. inflation data

Yesterday afternoon, América Móvil reported its 4Q23 results. Revenues reached $204.416 billion pesos, in line with our estimates. The variation compared to the same period of the previous year was -2.5%, influenced by the appreciation of the Mexican peso, which negatively impacted international operation revenues. The company added 3.9 million new mobile subscribers in the quarter, highlighting growth in Brazil and Austria in postpaid, and in Colombia in prepaid. EBITDA decreased by 3.3% to 79.680 billion pesos, with a profitability margin of 39.0%, staying in line with the fourth quarter of 2022. On the other hand, net profit experienced a significant increase of 67.8%, reaching 26.421 billion pesos.

In 4Q23, Nemak’s revenues registered a 2.0% year-on-year growth, while EBITDA increased by 5.8% year-on-year, resulting in an improvement in the EBITDA margin, which stood at 11.2%, up from 10.8% in 4Q22. Volumes in North America saw declines; however, other regions maintained good performance.

Corporate news

*Bolsa’s revenues increased by 5% year-on-year during 4Q23, while EBITDA also increased by 5%, maintaining the EBITDA margin at 58%. On the other hand, the company announced that at its next Shareholders’ Assembly, to be held no later than April 30, 2024, it will propose the payment of a cash dividend of P$2.12 per share, representing a yield of 5.9% at the last closing price.

*Lyft’s shares rose before the opening as the company reported quarterly results better than expected in terms of revenue and profits. Additionally, the company projected a 50 basis point expansion in adjusted profit margin by 2024.

*Uber announced that it will initiate a share buyback program for $7 billion.

*Robinhood’s shares rose by around 16.5% as the platform reported revenues and profits better than expected by analyst consensus. Earnings per share stood at 3 cents, while the market expected 1 cent.

*Airbnb’s shares declined before the opening. Despite reporting better-than-expected revenues, the company noted that 1Q24 reservations face a high comparison base.

*Kimberly Clark Mexico will propose a dividend of P$1.86 per share at the shareholders’ assembly to be held on February 29, 2024. The dividend, at the last price, will be 4.9%.