The Day at a Glance | February 19 2025

The Top

• The Central Bank of Mexico´s quarterly inflation report for the October-December 2024 period will be released later today.

• President Donald Trump announced that on April 2^nd, he will impose tariffs of nearly 25% on automobiles, followed by similar measures for semiconductors and pharmaceuticals.

• Federal Reserve officials remain uncertain about the impact of tariffs on inflation but have begun highlighting more serious risks to supply chains, public expectations, and ultimately prices, as the Trump administration’s import tax plans take clearer shape.

• Key European Central Bank officials outlined the terms of an upcoming monetary policy debate on Wednesday, revealing differing views on inflation risks and the extent to which the bank continues to restrain economic growth.

• On Wednesday, China released an action plan aimed at stabilizing foreign investment, which includes allowing foreign firms to use domestic loans for capital investments and directing foreign capital flows toward the country’s service sector.

• Bank of Japan board member Hajime Takata stated that interest rates need to rise further, warning that keeping them too low could encourage excessive risk-taking and push inflation too high, reinforcing expectations of additional increases in borrowing costs.

• Oil prices edged higher on Wednesday, driven by concerns over potential supply disruptions in Russia and the US, as markets await clarity on sanctions amidst Washington’s efforts to negotiate an end to the war in Ukraine.

Economic Environment

The Central Bank of Mexico´s quarterly inflation report for the October-December 2024 period will be released later today. This report provides an updated macroeconomic outlook, in which some adjustments are anticipated. The central bank currently estimates 1.2% GDP growth for 2025; however, given the unusual contraction in GDP in the last quarter of 2024, this projection may be revised downward, possibly below 1.0%. Such an adjustment would also lead to a downward revision in formal job creation, as historical data suggests that every percentage point of GDP growth typically translates to 100,000 new jobs. No changes are expected in the inflation forecast, though the report may include estimates or hints about potential impacts should Donald Trump’s proposed tariffs take effect. In our view, this aspect of the report could be the most significant.

Markets and Companies

US index futures are logging slight changes after a record-breaking session. On Tuesday, the S&P 500 reached an all-time high despite persistent concerns about inflation and President Trump’s trade policies.

In Europe, markets are down today as investors digest corporate reports and higher-than-expected inflation in the UK. The Stoxx 600 fell -0.59% at 11:45 a.m. in London, retreating from the all-time closing high reached on Tuesday.

Meanwhile, in Asia, markets posted mixed movements after Trump proposed tariffs in the range of 25% on automobile, semiconductor, and pharmaceutical imports.

In the commodities market, oil prices rose on Wednesday, driven by supply disruptions in the US and Russia, as markets await further clarity on sanctions amidstWashington’s attempts to negotiate a deal to end the war in Ukraine.

Gold prices remained steady on Wednesday, with markets closely watching peace talks after the Trump administration agreed to hold further negotiations with Russia to end the Ukraine war.

The exchange rate stands at 20.37, after closing at 20.26 yesterday.

Chedraui reported its quarterly results yesterday afternoon. 4Q24 consolidated sales increased +11.2%, driven by strong performance in Autoservicio México, Chedraui USA (with a 16.5% currency benefit), and the Real Estate division. However, transition costs related to the new CEDIS in the US ($14.9 million) and Smart & Final’s pricing campaign impacted profitability. As a result, EBITDA fell -7.2% at the consolidated level.

During 4Q24, Alfa’s revenue in dollars remained stable compared to 4Q23, while comparable EBITDA declined 7% y/y. The results came in below expectations, largely reflecting currency effects. Sigma’s 4Q24 revenue reached $2.166 billion, in line with 4Q23. Volume increased 2% y/y, with growth across all regions except Europe. EBITDA stood at $222 million, down 7%, mainly due to the impact of the peso depreciation on Mexico operations.

In 4Q24, Alpek reported a 3% y/y revenue growth in dollars and a 1% y/y increase in comparable EBITDA. At the consolidated level, volumes grew 2% y/y, supported by more stable demand. In its 2024 guidance, Alpek had projected comparable EBITDA of $675 million, while the reported figure was $699 million. For 2025, the company expects demand and reference margins to remain stable. Tomorrow, the company will release its results guidance.

Corporate News

• Toll Brothers shares fell more than 5% in pre-market trading after the homebuilder reported first-quarter fiscal results below expectations. The company posted earnings of $1.75 per share with revenue of $1.84 billion.

• Shares of Bumble plunged 16.8% after the online dating platform issued a weak guidance for 1Q25. The company forecasts an adjusted EBITDA between $60 million and $63 million, with revenue in the range of $242 million to $248 million.