The Day at a Glance | February 20 2025

The Top

• Retail sales closed 2024 with stagnation.

• On Wednesday, US President Donald Trump announced that he will introduce new tariffs next month or sooner, adding lumber and forestry products to his previously announced plan to impose duties on automobile, semiconductor, and pharmaceutical imports.

• The US has stated the possibility of establishing a new trade agreement with China despite ongoing tensions and the recent imposition of an additional 10% tariff on Chinese imports.

• Later today, the Central Bank of Mexico´s meeting minutes will be released, with attention focused on the monetary stance of the new deputy governor, Gabriel Cuadra, as well as discussions on the anticipated upcoming rate cuts.

• China left its benchmark interest rates unchanged in its monthly review on Thursday, reflecting policymakers’ caution in applying monetary stimulus while prioritizing financial and exchange rate stability.

• In January, Taiwan’s export orders fell for the first time in 11 months due to weaker demand for technology products amidst a seasonal slowdown. However, the government remains optimistic about sustained demand for artificial intelligence technologies.

• On Thursday, oil prices remained nearly unchanged after hitting a nearly one-week high in the previous session, as industry data showed a rise in US crude inventories.

Economic Environment

Retail sales closed 2024 with stagnation. INEGI reported that retail sales rose 0.1% m/m in December, exceeding the market consensus expectation of a -0.4% m/m decline but below November’s 0.2% m/m growth. On an annual basis, based on original figures, sales fell -0.2% in the last month of the year, outperforming market expectations of a -1.7% drop. Within the annual figures, grocery, food, beverage, and tobacco sales stood out with a 9.3% increase, while supermarket and department store sales declined -1.9%, and online sales rose 6.6%. Overall, retail sales closed 2024 withstagnation, though there are significant differences across consumer sectors.

Markets and Companies

Futures for major US indices were trading mixed this morning as investors digested a series of corporate reports. Walmart was declining after issuing revenue and earnings guidance below expectations, putting pressure on the sector.

In Europe, markets were mostly positive despite declines in Renault, Mercedes-Benz, and Airbus following their earnings releases. In Asia, major indices closed lower. The Nikkei 225 fell for a second consecutive day, weighed down by the yen’s appreciation and expectations that the Bank of Japan may raise rates sooner than anticipated.

In the commodities market, oil was posting slight gains as the market continued to assess rising US crude inventories and concerns over global demand. Meanwhile, gold reached a new all-time high, driven by uncertainty surrounding US trade policies and escalating geopolitical tensions.

In fixed income, US Treasury yields edged lower. The 10-year yield fell to 4.51%, while the 2-year yield stood at 4.26%.

As for IPC futures, they were trading higher, while the exchange rate stood at 20.37 pesos per dollar, showing a slight appreciation from yesterday´s 20.4 at market close.

In 4Q24, Nemak’s revenue increased 6.0% y/y, while operating cash flow rose 21.2% y/y. The results were in line with expectations, leading to a neutral implication for the report. We expect the company to release its earnings guidance today.

In 4Q24, Fibra Monterrey reported a 27.7% y/y increase in revenue, while net operating income (NOI) rose 28.1% y/y, and funds from operations (FFO) increased 62.4% y/y. The results slightly exceeded our estimates, and we view the report as positive. For 2025, FMTY expects adjusted funds from operations (AFFO) per certificate to range between $1.083 and $1.095, implying annual growth of 7%-8%, depending on various exchange rate scenarios for the peso against the dollar. For exchange rates between 19.50 and 21.49 pesos per dollar, the distribution per certificate would range from $1.035 to $1.131 pesos per certificate, representing a distribution yield of around 10%, based on the latest price.

Corporate News

• Walmart was declining after forecasting lower-than-expected revenue and earnings growth for fiscal year 2026, despite exceeding expectations in its latest quarter. The company warned of potential tariff-related cost impacts.

• Alibaba was gaining after reporting strong quarterly results, with revenue and earnings surpassing estimates, which also boosted other e-commerce companies in China.

• Palantir remained in negative territory after news that the US Department of Defense plans to cut its budget by 8% in the coming years, weighing on confidence in the defense sector.