The Day at a Glance | February 6 2024

The Top

*Yesterday, the Federal Executive power sent a package of 20 constitutional reforms.

*Retail sales in the Eurozone fell less than expected in December.

*The OECD predicts a moderation in global and Mexican growth for 2024 and 2025.

*The U.S. ISM services index positively surprised in January, reaching 53.4 points, surpassing December’s 50.6 and the analysts’ 52.0 forecast.

*Nikki Haley appears to be the winner in the Republican primary elections this Tuesday in Nevada.

*The Bank of Japan is ready to change its monetary policy in April, aided by salary prospects.

*Wall Street will focus on the household debt and credit report from the Federal Reserve Bank of New York for the fourth quarter.

Economic environment

Yesterday, February 5th, the Federal Executive power sent a package of 20 constitutional reforms. We highlight those with the greatest economic impact: 1) Banning the extraction of hydrocarbons through fracking and not granting concessions for open-pit mining activities, 2) Not allowing the minimum wage increase to be lower than inflation, 3) Reversing the pension reforms of 1997 by Zedillo and 2007 by Calderón, for which a seed fund of 64,619 million pesos will be created from May 1st, 4) An electoral reform to reduce campaign and political party expenses, decrease the number of councilors, avoid the use of excessive bureaucratic structures, and eliminate plurinominal candidacies, 5) Judges and magistrates will be elected by the people, 6) Incorporating the national guard into the National Defense, and 7) Eliminating dependencies and autonomous organisms.

Retail sales in the Eurozone recorded a -0.8% year-on-year decline in December. December´s figure compared positively against the -1.1% forecasted by analysts, falling for the fifteenth consecutive month. On a monthly basis, retail sales dropped by -1.1%, surprising negatively after the 0.3% increase in November and the -1.0% expected by the consensus. The decline in retail sales was mainly due to a -3.7% decrease in online sales (-0.1% prev.), as well as a -1.6% drop in the sales of food, beverages, and tobacco (-0.1% prev.). On an annual basis, the decline in retail sales was mainly attributed to a -6.2% drop in fuel sales, down from November’s -3.3%. Additionally, in the Eurozone, producer price inflation data for December was published yesterday, showing a -0.8% month-on-month price decline (and -10.6% year-on-year).

Markets and companies

Global markets with positive sentiment. Yesterday, futures of major U.S. indices recorded declines. The Dow fell 274.30 points, while the S&P 500 retreated from its all-time high, decreasing by 0.32%, and the Nasdaq Composite dropped by 0.2%. Today, the Nasdaq is up 0.68%, the Dow is up 0.18%, and the S&P 500 is up 0.46%. Meanwhile, Treasury yields rose more than 13 basis points, reaching 4.166% after the release of solid economic data. In Europe, markets remain unchanged with the EuroStoxx index up +0.42%, as investor confidence remains strong despite a lack of a clear schedule for interest rate cuts. On the other hand, retail spending growth in the UK slowed in January, as the cost of living crisis continues to impact households. In Asia, markets closed mixed; Japan’s Nikkei 225 fell by -0.53%, closing at 36,160.70. Meanwhile, China recorded an increase of 3.23% over the weekend; regulatory authorities in China announced a series of measures aimed at stopping the observed decline in the stock market. As part of these actions, limits on short-selling would be imposed, restrictions on hedge fund operations, and some investors would be prohibited from reducing stock positions. State investment vehicle Huijin Investment stated it would increase its investments in Chinese market ETF´s. In Mexico, IPC futures continue to rise, reaching $58,838 points (+1.05%). Oil prices assessed U.S. Secretary of State Antony Blinken’s visit to the Middle East to discuss a ceasefire in the region. The price stands at $73.27 per barrel. Natural gas prices are on the rise. Gold remained near a more than one-week low reached in the previous session; today, the ounce trades at $2027.07, as the dollar remained firm due to growing expectations that the Federal Reserve will not be more aggressive with rate cuts this year. Silver trades at $22.33 per ounce, and copper at $377.50 per pound. Lastly, cryptocurrencies are on the rise; Bitcoin trades at $42,883 USD. 

After yesterday´s trading session, the exchange rate fluctuated between a minimum of 17.05 and a maximum of 17.13, currently trading at 17.06.

Volaris reported passenger traffic results for January 2024. The company transported a total of 2.491 million passengers. This implies a year-on-year decline of -13.0% (2.491m vs 2.862m in 2023). International passenger traffic increased by 12.6% YoY (719 thousand vs 639 thousand in 2023), in contrast to domestic, which recorded a decline of 20.3% (1.772 million vs 2.204 million in 2023). The airline confirmed that accelerated inspections of GTD engines have significantly reduced ASM capacity, especially in the Mexican market. Although this decrease has been offset by an increase in capacity in international markets.

Corporate news

*Palantir Technologies rose by 19.5% after reporting higher-than-expected revenue in the fourth quarter. Revenues were $608.4 million compared to the analysts’ forecast of $602.4 million.

*Chip manufacturer NXP Semiconductors gained over 3% after better-than-expected fourth-quarter results. The company’s revenues set at $3.42 billion, also surpassing analysts’ expectations of $3.40 billion.

*Chegg fell by 1% after the revenue guidance for the first quarter was lower than expected.

*Meta is expanding its efforts to identify AI-altered images while seeking to eliminate misinformation and deepfakes before upcoming worldwide elections. The company is developing tools to identify large-scale AI-generated content when it appears on Facebook, Instagram, and Threads. 

*Tesla logged declines, losing 2.3% after Daiwa downgraded Tesla’s rating from “outperform” to “neutral,” citing concerns about the company’s corporate governance and uncertainty about possible changes in the board or leadership.

*Spotify stock increased 7.4% after reporting an increase in Premium subscribers, reaching 236 million in the fourth quarter, exceeding analysts’ expectations.