The Day at a Glance | January 19 2024

*Retail sales in Mexico grew less than expected, advancing by 2.7% YoY in November (vs. an expected 3.2%). 

*INEGI published its Timely Indicator of Economic Activity (IOAE), which anticipates that the Monthly Indicator of Economic Activity (IGAE) would have registered a YoY growth of 2.6% in December.

*Radical Republicans that repeatedly paralyzed the U.S. Congress last year were sidelined in this month’s bipartisan campaign to avoid a government shutdown.

*The crisis in the Red Sea puts pressure on Chinese exporters as costs and shipping delays increase.

*UK retail sales suffered their worst decline in almost 3 years, raising the risks that the economy entered a recession at the end of 2023.

*Wall Street keeps its focus on Washington after Congress approved a bill to avoid a partial government shutdown.

Economic environment

In November, retail sales in Mexico recorded an annual 2.7% expansion. This reading fell below the consensus-expected 3.2% YoY and the previous 3.4% YoY, indicating a slowdown. Online sales showed a positive variation of 20.8% YoY. Additionally, there were significant advances in the sales of self-service and department stores (11.8% YoY), followed by textile product sales (7.3% YoY). Simultaneously, motor vehicle sales dropped by -4.7% YoY, accompanied by hardware sales (-7.5% YoY). On a monthly basis and based on seasonally adjusted figures, retail sales decelerated significantly, going from a strong 0.7% increase in October to a slight 0.1% hike in November, far from the consensus estimate of 0.5%.

INEGI announced that the Timely Indicator of Economic Activity (IOAE) estimates a 2.6% YoY rate of growth in the IGAE, implying an economic deceleration at the end of the year. December´s reading pointed to slower growth than what was logged in November (3.1% previously). These results are primarily derived from an expected 2.7% (previously 3.0%) increase in secondary activities, accompanied by a 2.2% increase (previously 2.8%) in tertiary activities. On a monthly basis, the IOAE anticipates a 0.1% rate of growth in the IGAE (-0.4% previously).

Markets and companies

Global markets carry positive sentiment. Futures of U.S. indices are in positive territory, with the S&P 500 and Nasdaq erasing the accumulated losses recorded so far this year. The momentum was driven by significant advances in technology, especially after Bank of America upgraded Apple’s stock rating to “Buy.” The Dow Jones is up by 1.11%, while the S&P 500 records an increase of 1.21%, and the Nasdaq Composite is up by 1.54%. Meanwhile, the yield on the 10-year Treasury bond continues to set above 4.00%. In Europe, they continued their upward trend from the previous session, with the EuroStoxx up +0.33%, leaving behind the pessimism experienced earlier in the week. In Asia, markets are mixed, with China falling by -0.47%, and Japan’s Nikkei 225 recovering after two consecutive days of losses, reaching 35,963.3. In Mexico, IPC futures opened higher, reaching 55,652 points (+1.73%). The price of oil remained stable but on track for a weekly gain, while geopolitical tensions in the Middle East and production disruptions caused by cold weather in the United States continue. Additionally, yesterday’s attacks between Pakistan and Iran are highlighted, and the United States launched new attacks against the Houthi. The price is set at $73.91 per barrel, a decrease of -0.2%. Natural gas prices are down by -3.00%, although Ukraine’s largest company seeks to double the amount of inventories for the next winter, defying attacks by Russia. Meanwhile, metal prices experienced a slight increase, with the price of gold setting at $2,038 per ounce, silver trading at $22.78 per ounce, and copper at $377.95 per pound. Lastly, cryptocurrencies are advancing.

After yesterday´s trading session, the exchange rate fluctuated between a minimum of 17.12 and a maximum of 17.18, currently trading at 17.13.

Kimberly Clark Mexico reported its quarter earnings yesterday; it was a positive report. The increase in revenue (+25.5% vs. +20.4%e.) is attributed to the growth in Consumer Products (+7%) and Away from Home (+11%), while Exports declined by -13% year on year. Regarding profits, EBITDA advanced by +25.5% (vs. +20.4%e.), and the margin increased by 460 basis points, mainly due to lower raw material costs.

Corporate news

*iRobot’s stocks fell nearly 40% after The Wall Street Journal reported that the European Commission is likely to reject Amazon’s offer to acquire the Roomba manufacturer.

*Meta Platforms is making a significant investment in Nvidia’s semiconductors to support its artificial intelligence goals.

*Wendy’s Company increased by 1% after the company announced that PepsiCo executive Kirk Tanner would be its new CEO.

*Super Micro Computer reported strong results, and its stocks rose by almost 6%.

*Amazon Web Services announced a $15.24 billion investment in Japan by 2027, aiming to meet the growing demand for cloud services from customers in the country.

*Macy’s is cutting approximately 2,350 jobs, equivalent to 3.5% of its workforce, and closing five locations in shopping malls to reduce costs and revitalize declining sales.