The Day at a Glance | February 8 2024

The Top

*In Mexico, general inflation for January stood at 4.88%, above the market estimate and our own at 4.85%. 

*Consumer prices in China fell by -0.8% YoY in January (-0.5% est.), marking their fourth consecutive month of decline, the worst streak since 2009. Additionally, producer prices decreased by -2.5% annually in the first month of 2024 (-2.7% prev.). 

*Initial jobless claims in the U.S. decreased to 218 thousand during the week ending on February 2nd (227 thousand prev.). 

*The Bank of Japan rules out rapid interest rate hikes and signals the end of purchasing risky assets.

*Stronger than expected earnings season drives U.S. markets to new highs.

Economic environment

In Mexico, general inflation for January stood at 4.88%, above the market estimate and our own at 4.85%. Today, INEGI released the National Consumer Price Index for January, showing a 0.88% increase, slightly above the market estimate and our own at 0.86%, respectively. Core inflation, which excludes more volatile items such as energy and agricultural products, and government tariffs, grew by 0.40% MoM and 4.76% YoY in the first month of the year. The statement highlights that the three items with the greatest impact on inflation for that period were tomatoes, onions, and lunchrooms, eateries, and taco stands. INEGI stated that it will continue to impute prices of missing goods and services that still cannot be captured in Acapulco due to Hurricane Otis. January´s data is attributed to a rebound in non-core inflation, which stands at 5.24% YoY. Going forward, this category is likely to continue exerting pressure on general inflation, especially due to base comparison effects.

Markets and companies

Markets with mixed movements, attention on reports. Futures for stock indices traded with marginal movements, after yesterday’s close of the S&P 500 at a level close to 5,000 points, continuing the momentum seen in markets due to the rise in mega-cap tech companies. The S&P 500´s futures showed a variation of -0.16%, Nasdaq -0.19%, and DJI -0.01%. In recent sessions, the market has experienced a boost due to the rise in mega-cap technology stocks. Additionally, investors have reacted positively to the corporate earnings season for 4Q23. In Asia, mixed movements were observed. The Nikkei rose by 2.0%, the CSI advanced by 0.6, while the HSI declined by 1.3%. Nikkei reached a new high in 34 years after the governor of the Bank of Japan, Shinchi Uchida, stated that while the organization plans to end its negative interest rate policy, the increases will not be aggressive. Currently, the BOJ’s target rate is -0.1%. The HSI was affected by a nearly 6% decline in Alibaba’s shares after reporting below-expected results, impacting the HSI’s performance. In China, attention was on the reduction of price levels; the Consumer Price Index for January recorded a decrease of 0.8% YoY, while an increase of 0.5% was expected. In Europe, markets showed a positive trend as investors assimilated reports from companies such as Unilever, Societe Generale, Maersk, and Siemens. As for commodities, oil prices advanced nearly 1%, anticipating strong demand in the U.S. and keeping an eye on the evolution of negotiations between Israel and Palestine. Regarding metals, gold and copper experienced marginal declines, awaiting more clarity regarding the start of the interest rate reduction cycle by the Federal Reserve. In Mexico, IPC futures remained on the rise, reaching 59,437.0 points (+1.2%). Cryptocurrencies were on the rise. Bitcoin traded at 44,791.6 (+1.5%).

Regarding the exchange rate, the peso depreciated by about 0.14%, reaching 17.09 MXN. During the night, it reached a minimum of 17.03 and a maximum of 17.10.

Arca Contal reported its 4Q23 results this morning. Revenues set below our estimates (-5.0% vs +0.5% est.); the strong performance in Mexican operations was more than offset by figures in the U.S., and especially, South America. Regarding profits, the progress in EBITDA was practically negligible (+0.3% vs +2.3% est.).

Cemex reported results for the fourth quarter of 2023 this morning. The company reported virtually in line with our estimates. They reported revenues of 4,243 million dollars. This implies a 5% YoY increase, driven by their pricing strategy. As for EBITDA, they reported 743 million dollars, representing a 13% YoY increase, due to a slowdown in input cost inflation, surpassing expectations of recovering 2021 levels. It´s important to highlight that the United States reported an annual record EBITDA in Cemex’s history, reaching 1,040 million dollars

Corporate news

*Funo carried out a placement of a green bond in international markets for an amount of 600 million dollars, with a coupon rate of 7.375% and a maturity of 10 years. The funds will be used to prepare for the bond due in December 2024, making the leverage level effect neutral.

*OMA announced that during January, passenger traffic increased by 0.6% YoY. By origin, national passengers decreased by 0.6%, and international passengers increased by 7.7%. Excluding Acapulco, affected by the Hurricane Otis effect, traffic increased by 3.4% in the remaining 12 airports.

*Quálitas received a notification from SAT where it was determined that the company must cover a tax credit. Quálitas will use legal means to defend itself against this resolution.

*Disney’s shares rose by about 7.8% before the opening after the company’s earnings per share reached $1.22, exceeding the consensus of 99 cents. Additionally, the company’s annual guidance was positive, projecting a 20% growth in adjusted earnings for 2024.

*PayPal provided guidance for 1Q24 and 2024 slightly below market expectations, despite 4Q23 results exceeding expectations. In January, the company announced a workforce reduction of 2,500 employees, representing about 9% of its staff. Shares were down 9.4% before the opening.

*New York Community Bancorp’s shares continued to fall after Moodys downgraded the bank’s rating to speculative grade. This was compounded by a lawsuit from shareholders.