The Day at a Glance | February 19 2024

The Top

*The Timely Indicator of Economic Activity (IOAE) estimates that in January, the Mexican economy grew 2.2%. 

*The People’s Bank of China left a key policy rate unchanged on Sunday, as expected, while renewing medium-term loans set to expire. 

*Spending on travel in China during the Lunar New Year holidays surpasses pre-pandemic levels. 

*France cuts its growth forecast for 2024 as economic prospects darken (1.0% vs. previous 1.4%). 

*The EU launches a naval operation to protect ships in the Red Sea. 

*Holiday in the U.S. for Presidents’ Day.

Economic environment

The Timely Indicator of Economic Activity (IOAE for its acronym in Spanish) estimates that in January, the Mexican economy grew by 2.2%, surpassing the 2.0% anticipated in December 2023, according to seasonally adjusted figures. By components, the IOAE predicts that industrial production, including construction, manufacturing, electricity generation, and mining, will grow by 1.9%, while services will grow by 2.0%, both on an annual basis, with seasonal adjustments for the first month of 2024. Regarding month-on-month figures, it is estimated that the economy will grow at a positive rate of 0.1% in January, following a possible decline of -0.3% in December. For its main sectors, a growth of 0.2% is forecasted for the industry (previous -0.7%) and 0.1% (previous -0.4%) for services, also according to month-on-month figures. The IOAE expects that the economy will likely recover its growth path in the first month of the year, after observing a slowdown in various economic indicators in November and December. According to figures from the IGAE and the IOAE’s estimate for the end of last year, the economy grew by 3.3% in 2023.

Markets and companies

Today, the U.S. stock market will remain closed due to the Presidents’ Day holiday, resulting in lower trading volume in other markets. The market will reopen tomorrow after the previous week saw major stock indices retreat in response to higher-than-expected inflation figures, tempering expectations for the Federal Reserve to initiate interest rate cuts. In this regard, the market assigns an 89.5% probability to the Fed keeping its interest rate unchanged in the March meeting, while cuts are anticipated in the second half of the year. In Europe, markets were operating with a negative bias; the EuroStoxx 600 declined by 0.2%, while in Asia, the Chinese market resumed trading on the rise after being closed for the Lunar New Year holiday. Over the weekend, the People’s Bank of China kept its benchmark interest rate unchanged, as expected. The Nikkei showed a marginal retreat. In corporate news, 33 companies from the S&P 500 sample are expected to report this week. So far, 395 companies have reported, with 80% surpassing earnings expectations. The consensus estimate is a year-over-year earnings growth of 9.6% for the quarter. Notable companies releasing results this week include Nvidia, Home Depot, among others. In the debt market, the 10-year Treasury bond reached levels of around 4.6%, experiencing a weekly rebound in response to inflation figures. Regarding commodities, the price of oil showed slight changes, with WTI trading at $79.24 per barrel. Investors are assessing global growth prospects and the evolution of the conflict in the Middle East. As for Mexico, the IPC futures were trading higher, standing at 57,509.0. The exchange rate was at 17.04 pesos per dollar; it reached 17.07 overnight.

Corporate news

*Nintendo shares declined after reports suggested that the release of the Switch 2 console would be postponed until 2025. 

*Sony experienced a decline in market capitalization after the company lowered its sales forecast for the PlayStation 5 console.

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